Nomura Holdings Inc F-3ASR, filed Dec 19, 2024
Nomura Holdings Inc (NMR)
As filed with the Securities and Exchange Commission on December 19, 2024
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NOMURA HORUDINGUSU KABUSHIKI KAISHA
(Exact Name of Registrant as Specified in its Charter)
NOMURA HOLDINGS, INC.
(Translation of Registrant’s Name into English)
Japan
(State or Other Jurisdiction of Incorporation or Organization)
None
(I.R.S. Employer Identification Number)
13-1, Nihonbashi 1-chome
Chuo-ku, Tokyo 103-8645
Japan
(81-3-6746-7720)
(Address and Telephone Number of Registrant’s Principal Executive Offices)
Nomura Holding America Inc.
Worldwide Plaza, 309 West 49th Street
New York, New York 10019-7316
(212-667-9000)
(Name, Address and Telephone Number of Agent for Service)
Copies To:
| Keiji Hatano, Esq. Nirav N. Mehta, Esq. Sullivan & Cromwell LLP Otemachi First Square 5-1, Otemachi 1-chome Chiyoda-ku, Tokyo 100-0004 Japan (81-3-3123-6140) |
David C. Snowden, Esq. Simpson Thacher & Bartlett LLP Ark Hills Sengokuyama Mori Tower 9-10, Roppongi 1-chome Minato-ku, Tokyo 106-0032 Japan (81-3-5562-6217) |
Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.
If only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐
If any of the securities being registered on this Form are to be offered on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act of 1933, check the following
box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a registration statement pursuant to General Instruction I.C. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☒
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.C. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
PROSPECTUS
Nomura Holdings, Inc.
Senior Debt Securities
Perpetual Subordinated Debt Securities
We may offer, from time to time, in one or more offerings, senior debt securities or perpetual subordinated debt securities, which we collectively refer to herein as “debt securities.” This prospectus describes some of the general terms that may apply to these debt securities and the general manner in which they may be offered. The specific terms of any debt securities to be offered, and the specific manner in which they may be offered, will be described in supplements to this prospectus. The prospectus supplements may also supplement, update or amend information contained in this prospectus. Before you invest in any of the debt securities, you should read this prospectus and any applicable prospectus supplement, including documents incorporated by reference herein or therein.
We may offer and sell the debt securities on a continuous or delayed basis directly to investors or through one or more underwriters, dealers or agents, including the firm named below, or through a combination of these methods. The names of any underwriters, dealers or agents will be included in a prospectus supplement. If any underwriters, dealers or agents are involved in the sale of any debt securities, the applicable prospectus supplement will set forth any applicable commissions or discounts.
Investing in any of these securities involves risks. See “Item 3. Key Information—D. Risk Factors” in our most recent annual report on Form 20-F filed with the U.S. Securities and Exchange Commission (the “SEC”), “Risk Factors” in our current report on Form 6-K submitted to the SEC on December 13, 2024, any updates thereto included in any of the documents incorporated by reference herein, the “Risk Factors” section in this prospectus (beginning on page 2) and any risk factors included in the applicable prospectus supplement under the caption “Risk Factors.”
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE DEBT SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
We may use this prospectus in the initial sale of the debt securities. In addition, Nomura Securities International, Inc. or any other of our affiliates may use this prospectus in a market-making transaction in any of these debt securities or similar securities after their initial sale. Unless we or our agent inform the purchaser otherwise in the confirmation of sale, this prospectus is being used in a market-making transaction.
Nomura
The date of this prospectus is December 19, 2024.
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ABOUT THIS PROSPECTUS
The terms “NHI,” “Nomura,” the “Nomura Group,” “we,” “us,” and “our” refer to Nomura Holdings, Inc. and, unless the context indicates otherwise, its consolidated subsidiaries. Furthermore, unless the context indicates otherwise, these references are intended to refer to us as if we had been in existence in our current form for all periods referred to herein. We use the word “you” to refer to prospective investors in the debt securities and the word “holder,” “securityholder” or “securityholders” to refer to the holders of the debt securities.
Our consolidated financial statements, which are incorporated by reference into this prospectus, have been prepared in accordance with accounting principles generally accepted in the United States of America, which we refer to as “U.S. GAAP.” Our consolidated financial statements are denominated in Japanese yen, the legal tender of Japan. When we refer to “yen” or “¥,” we mean Japanese yen. When we refer to “$,” we mean U.S. dollars.
This prospectus is part of a registration statement on Form F-3 which we filed with the SEC, using a “shelf” registration process. Under this shelf process, we may sell any combination of the debt securities described in this prospectus in one or more offerings.
This prospectus provides you with a general description of the debt securities we may offer. The specific terms of any debt securities we offer will be included in a supplement to this prospectus.
A supplement to this prospectus may be in the form of one or more prospectus supplements, pricing supplements, addenda or free writing prospectuses, any and all of which are referred to herein as a “prospectus supplement” or “supplement to this prospectus.” The prospectus supplement will also describe the specific manner in which we will offer the debt securities. The prospectus supplement may also supplement, update or amend information contained in this prospectus. You should read both this prospectus and any prospectus supplement together with the additional information described under the heading “Where You Can Find More Information.”
You should rely only on the information contained in or incorporated by reference into this prospectus or any prospectus supplement. We have not authorized anyone to provide you with information different from that contained in or incorporated by reference in this prospectus or any prospectus supplement. We are offering to sell the debt securities only in jurisdictions where offers and sales are permitted. The information contained in or incorporated by reference in this prospectus or any prospectus supplement is accurate only as of the date on the front of those documents, regardless of the time of delivery of the documents or any sale of the debt securities.
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FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement and the information incorporated by reference in this prospectus include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, in the future we, and others on our behalf, may make statements that constitute forward-looking statements. You should not place undue reliance on any of these statements. Such forward-looking statements may include, without limitation, statements relating to the following:
| • | our plans, objectives or goals; |
| • | our future economic performance or prospects; |
| • | the potential effect on our future performance of certain contingencies; and |
| • | assumptions underlying any such statements. |
Words such as “believe,” “anticipate,” “expect,” “intend” and “plan” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. We do not intend to update these forward-looking statements except as may be required by applicable securities laws.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other outcomes described or implied in forward-looking statements will not be achieved. We caution you that a number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. Certain of such factors are discussed under herein under the caption “Risk Factors,” in our most recent annual report on Form 20-F, which is incorporated herein by reference, under the caption in “Item 3. Key Information—D. Risk Factors” and in our current report on Form 6-K submitted to the SEC on December 13, 2024, which is incorporated herein by reference, under the caption “Risk Factors.” When evaluating forward-looking statements, you should carefully consider these factors and other uncertainties and events, the risk factors and other information contained in or incorporated by reference in this prospectus, as well as the risk factors relating to us, a particular security offered by this prospectus or a particular offering discussed in the applicable prospectus supplement.
SUMMARY RISK FACTORS
Investing in the debt securities involves a number of risks, and prospective investors are urged to carefully consider the matters discussed under “Risk Factors” in this prospectus, in our most recent annual report on Form 20-F, which is incorporated herein by reference, under the caption in “Item 3. Key Information—D. Risk Factors” and in our current report on Form 6-K submitted to the SEC on December 13, 2024, which is incorporated herein by reference, under the caption “Risk Factors,” as well as other similarly titled sections of other documents which may in the future be incorporated by reference herein, prior to making an investment in the debt securities. Such risks include, but are not limited to:
| • | Risks relating to the business environment, such as; |
| • | risks associated with financial markets, economic conditions, and market fluctuations in Japan and elsewhere around the world, including the ones caused by geopolitical events; |
| • | the effect of intense competition in the financial services industry; and |
| • | risks arising from unpredictable events and their effect on trading and investment assets as well as market and liquidity risks; |
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| • | Risks relating to the conduct of our business, such as: |
| • | potential significant losses from trading and investment activities; |
| • | risks relating to holding large and concentrated positions of securities and other assets; |
| • | insufficient protection from our hedging strategies; |
| • | the potential ineffectiveness of our risk management policies and procedures; |
| • | potential revenue declines in our brokerage and asset management or investment banking businesses; |
| • | potential exposure to losses when third parties do not perform their obligations to us; |
| • | potential exposure to model risk, i.e., risk of financial loss, incorrect decision-making, or damage to our credibility arising from model errors or incorrect or inappropriate model application; |
| • | risks relating to our inability to realize gains or potential losses on our investments in equity securities and non-trading debt securities; and |
| • | the outflow of clients’ assets due to losses of cash reserve funds or debt securities we offer; |
| • | Risks relating to our financial position, such as: |
| • | potential recognition of impairment losses; and |
| • | the effect of liquidity risk on our ability to fund operations which could jeopardize our financial condition; |
| • | Risks relating to legal, compliance and other operational issues, such as: |
| • | operational risk; |
| • | risks relating to the possibility that we may identify material weaknesses in our internal control over financial reporting in the future; |
| • | legal, regulatory and reputational risks; |
| • | unauthorized disclosure or misuse of personal information held by us; and |
| • | failure to hire, retain or develop qualified personnel; |
| • | Risks relating to the terms of the debt securities generally and the market therefor, including: |
| • | risks related to structural subordination of our obligations under the debt securities to the indebtedness and other liabilities of our subsidiaries; |
| • | the risk that the value of the debt securities could be materially adversely affected, up to their full value, due to the possibility that the debt securities may become subject to loss absorption if we become subject to orderly resolution measures under the Deposit Insurance Act (as defined herein) and Japanese insolvency laws; |
| • | the risks that the circumstances surrounding or triggering orderly resolution are unpredictable and the Japanese TLAC Standard (as defined herein) is subject to change; and |
| • | the limited nature of the restrictive covenants and protection in the event of a change in control contained in the Indentures (as defined herein) and the debt securities; |
| • | Risks relating to the perpetual subordinated debt securities in particular, including: |
| • | that the perpetual subordinated debt securities will be subject to a Write-Down and Cancellation upon the occurrence of a Non-Viability Event or a Bankruptcy Event, in either of which cases you will lose the entire value of your investment; |
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| • | that the perpetual subordinated debt securities will be subject to a Going Concern Write-Down upon the occurrence of a Capital Ratio Event, in which case you will lose all or part of the value of your investment; |
| • | that we may cancel interest payments on the perpetual subordinated debt securities, in whole or in part, at any time; cancelled interest will not be due and will not accumulate or be payable at any time thereafter, and you will have no rights with respect to cancelled interest; and |
| • | that the perpetual subordinated debt securities have no fixed maturity and no fixed redemption date and you do not have the right to accelerate the repayment of the principal amount of the perpetual subordinated debt securities. |
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We are a joint stock corporation incorporated with limited liability under the laws of Japan. We engage in a broad range of businesses and services, including securities businesses, investment banking, asset management services, trust banking and other related services in Japan and abroad through our subsidiaries and affiliated companies. For further information, see “Item 4. Information on the Company” in our most recent annual report on Form 20-F.
For any particular series of senior debt securities we offer, the applicable prospectus supplement will describe the title and series of the senior debt securities, the aggregate principal amount and the original issue price; the stated maturity; the redemption terms, if any; the rate or manner of calculating the rate and the payment dates for interest, if any; the amount or manner of calculating the amount payable at maturity and whether that amount may be paid by delivering cash, securities or other property; and any other specific terms. The senior debt securities will be issued under the senior debt indenture entered into between us and Citibank, N.A., as trustee, dated as of January 16, 2020, (as amended or supplemented from time to time, the “Senior Debt Securities Indenture”). The senior debt securities offered in market-making transactions by our affiliates after initial issuance will include senior debt securities previously issued under the Senior Debt Securities Indenture. We have summarized the general features of the Senior Debt Securities Indenture under the heading “Description of Senior Debt Securities.” The Senior Debt Securities Indenture is included as an exhibit to the registration statement of which this prospectus forms a part.
PERPETUAL SUBORDINATED DEBT SECURITIES
For any particular series of perpetual subordinated debt securities we offer, the applicable prospectus supplement will describe the title and series of the perpetual subordinated debt securities, the aggregate principal amount and the original issue price; the redemption terms, if any; the rate or manner of calculating the rate and the payment dates for interest, if any; and any other specific terms. The perpetual subordinated debt securities will be issued under the perpetual subordinated indenture between us and Citibank, N.A., as trustee, to be entered into in connection with the first issuance of the perpetual subordinated debt securities (the “Perpetual Subordinated Debt Securities Indenture” and, together with the Senior Debt Securities Indenture, the “Indentures”). In addition to the initial issuance of any series of perpetual subordinated debt securities, our affiliates may also offer perpetual subordinated debt securities in market-making transactions using this prospectus. We have summarized the general features of the Perpetual Subordinated Debt Securities Indenture under the heading “Description of Perpetual Subordinated Debt Securities.” The Perpetual Subordinated Debt Securities Indenture is included as an exhibit to the registration statement of which this prospectus forms a part.
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Investing in the debt securities involves risks. You should consider carefully the risks relating to the debt securities generally, to the senior debt securities and to the perpetual subordinated debt securities described below, as well as the other information presented in, or incorporated by reference into, this prospectus and the prospectus supplement for the relevant offering, before you decide whether to invest in the debt securities. If any of these risks actually occurs, our business, financial condition and results of operations could suffer, and the trading price and liquidity of the debt securities offered could decline, in which case you may lose all or part of your investment. The following does not describe all the risks of an investment in the debt securities. Prospective investors should consult their own financial and legal advisors about risks associated with investment in a particular series of debt securities and the suitability of investing in the debt securities in light of their particular circumstances.
This prospectus contains, and the prospectus supplement for the relevant offering may also contain, forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including the risks described below, elsewhere in this prospectus and in the prospectus supplement for the relevant offering, in “Item 3. Key Information—D. Risk Factors” of our most recent annual report on Form 20-F, which is incorporated herein by reference, and under the caption “Risk Factors” in our current report on Form 6-K submitted to the SEC on December 13, 2024, which is incorporated herein by reference.
Risks Relating to Our Business
For information on risks relating to our business, see “Item 3. Key Information—D. Risk Factors” in our most recent annual report on Form 20-F and “Risk Factors” in our current report on Form 6-K submitted to the SEC on December 13, 2024.
Risks Relating to the Debt Securities Generally
The debt securities will be structurally subordinated to indebtedness and other liabilities of our subsidiaries, including Nomura Securities Co., Ltd. and Nomura Financial Products & Services, Inc.
Your claim as a securityholder is structurally subordinated to the liabilities of our subsidiaries, including our subsidiaries’ liabilities for collateralized financing, borrowed money, derivative and trading liabilities and payables and deposits. As a securityholder, you will only be entitled to assert a claim as a creditor of Nomura Holdings, Inc. that is to be paid out of Nomura Holdings, Inc.’s assets. If any of our subsidiaries becomes subject to insolvency or liquidation proceedings, you will have no right to proceed against such subsidiary’s assets.
We are a holding company that currently has no significant assets other than our investments in, or loans to, our subsidiaries, including Nomura Securities Co., Ltd. and Nomura Financial Products & Services, Inc. Our ability to service our debt obligations, including our obligations under the debt securities, thus depends on the dividends, loan payments and other funds that we receive from our subsidiaries. We may not be able to receive such funds from our subsidiaries due to adverse changes in their financial performance or material deterioration in their financial condition, restrictions imposed as a result of such adverse change or deterioration by relevant laws and regulations, including loss absorption requirements, limitations under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended) (the “FIEA”), general corporate law or any contractual obligations applicable to such subsidiaries. Furthermore, if a subsidiary becomes subject to insolvency or liquidation proceedings, our right to participate in such subsidiary’s assets will be subject to the prior claims of the creditors and any preference shareholders of the subsidiary, except where we are a creditor or preference shareholder with claims that are recognized to be ranked either ahead of or pari passu with such claims. As a result, you may not recover your investment in the debt securities in full or at all even though the preference shareholders in or creditors of our subsidiaries may recover their investments in full.
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Our loans to, or investments in capital instruments issued by, our subsidiaries made or to be made with the net proceeds from the sale of our instruments may contain contractual mechanisms that, upon the occurrence of a trigger event relating to prudential or financial condition or other events applicable to us or our subsidiaries under regulatory requirements, including the Internal TLAC (as defined below) requirements in Japan, will result in a write-down, write-off or conversion into equity of such loans or investments, or other changes in the legal or regulatory form or the ranking of the claims that we have against such subsidiaries. For example, to ensure that each of our material subsidiaries in Japan, as designated by Financial Services Agency of Japan (the “FSA”) as being systemically important, maintains the required minimum level of Internal TLAC under the Internal TLAC requirements in Japan or to comply with the capital adequacy regulations applicable to our material subsidiaries, we may extend to such subsidiaries, using the net proceeds from the sale of the debt securities and other debt instruments, subordinated loans that qualify as Internal TLAC instruments pursuant to the Internal TLAC requirements in Japan, including those containing contractual loss absorption provisions (“Contractual Loss Absorption Provisions”) that will discharge or extinguish the loans or convert them into equity of the subsidiaries if the FSA determines that the relevant subsidiaries are non-viable due to material deterioration in their financial condition after recognizing that they are, or are likely to be, unable to fully perform their obligations with their assets, or that they have suspended, or are likely to suspend, repayment of their obligations, by issuing an order concerning restoration of financial soundness, including recapitalization and restoration of liquidity of such subsidiaries, to us under Article 57-19, Paragraph 1 of the FIEA. Any such write-down, write-off or conversion into equity, or changes in the legal or regulatory form or the ranking, or the triggering of Contractual Loss Absorption Provisions, could adversely affect our ability to obtain repayment of such loans and investments and to meet our obligations under the debt securities as well as the value of the debt securities.
The debt securities are unsecured obligations.
Because the debt securities are unsecured obligations, their repayment may be compromised if:
| • | we enter into bankruptcy, liquidation, rehabilitation or other winding-up proceedings; |
| • | we default on the payment under our secured indebtedness or other unsecured indebtedness; or |
| • | any of our indebtedness is accelerated. |
If any of these events occurs, our assets may not be sufficient to pay amounts due on the debt securities.
A portion of our other debt is secured by our assets. In addition, as is common with most Japanese corporations, our loan agreements relating to short-term and long-term debt with Japanese banks and some insurance companies require that we provide collateral for the benefit of the lenders at any time upon request by the lenders if it has become necessary to protect their loan receivables. Lenders whose loans constitute a majority of our indebtedness have the right to make such request. Although we have not received any requests of this kind from our lenders, there can be no assurance that our lenders will not request us to provide such collateral in the future. Most of these loan agreements, and some other loan agreements, contain rights of the lenders to offset cash deposits held by them against loans to us under specified circumstances. Whether the provisions in our loan agreements and debt arrangements described above can be enforced will depend upon factual circumstances. However, if they are enforced, the secured claims of these lenders and banks would, by virtue of such security, have priority over our assets and would rank senior to the claims of holders of the debt securities.
The ratings of the debt securities may change after the issuance of the debt securities, and those changes may have an adverse effect on the market prices and liquidity of the debt securities.
We intend to apply for credit ratings for each series of debt securities issued under the registration statement of which this prospectus forms a part. Our credit ratings may not reflect the potential impact of all risks relating to the market value of the debt securities. However, real or anticipated changes in our credit ratings will generally affect the market value of the debt securities.
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In addition, other rating agencies may assign credit ratings to the debt securities with or without any solicitation from us and without any provision of information from us. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal. The assignment of new ratings that are lower than existing ratings, or a downgrade or potential downgrade in the ratings assigned to us, our subsidiaries or any of our respective securities could reduce the scope of potential investors in the debt securities and adversely affect the price and liquidity of the debt securities. We have no obligation to inform securityholders of any such downgrade, suspension, withdrawal or revision.
There are no prior markets for the debt securities and if markets develop, they may not be liquid.
There can be no assurance that any liquid markets for the debt securities will ever develop or be maintained. Any underwriters to whom offered debt securities are sold for public offering and sale may make a market in the offered debt securities, but the underwriters will have no obligation to make a market in the debt securities and they may stop at any time. Given that the debt securities are complex financial instruments with increased investment risks, the debt securities may have a more limited market compared to conventional debt securities. Further, there can be no assurance as to the liquidity of any markets that may develop for the debt securities or the prices at which you will be able to sell your debt securities, if at all. Future trading prices of the debt securities will depend on many factors, including:
| • | prevailing interest rates; |
| • | our financial condition and results of operations; |
| • | the then-current ratings assigned to the debt securities; |
| • | the market for similar securities; and |
| • | general economic conditions. |
Any trading markets that develop would be affected by many factors independent of and in addition to the foregoing, including, if applicable, the time remaining to the maturity of the debt securities, the outstanding amount of the debt securities and the level, direction and volatility of market interest rates generally.
In addition to the ordinary risks of illiquidity in the market for a new issue of securities, the debt securities may be especially susceptible to illiquid secondary markets and significant fluctuations in secondary trading prices. For example, if securities similar to the debt securities issued by other financial institutions are not redeemed when the market expects redemption or are written down, or if interest payments are cancelled, the liquidity of the market for, and market prices of, the debt securities could be adversely affected. As a result, you may not find buyers for your debt securities at prices close to their principal amount or at any price, and you may lose all or part of the value of your investment in the debt securities.
The debt securities are intended to qualify as our external TLAC debt and may become subject to loss absorption if we become subject to orderly resolution measures under the Deposit Insurance Act and Japanese insolvency laws. As a result, the value of the debt securities could be materially adversely affected, and you may lose all or a portion of your investments in the debt securities.
All of the debt securities are intended to qualify as our external total loss-absorbing capacity, or external TLAC, debt under the Japanese TLAC Standard (as defined below). Of these debt securities, the perpetual subordinated debt securities are intended to qualify also as our Additional Tier 1 Capital under the Applicable Capital Adequacy Regulations (each as defined in “Description of Perpetual Subordinated Debt Securities—Cancellation of Interest Payments—Optional Cancellation of Interest Payments”) and, as such, will be fully and permanently written down to zero under their contractual terms, if we become subject to orderly resolution measures under the Deposit Insurance Act of Japan (Act No. 34 of 1971, as amended; the “Deposit Insurance Act”). See “Risks Relating to the Perpetual Subordinated Debt Securities—The perpetual subordinated debt
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securities will be subject to a Write-Down and Cancellation upon the occurrence of a Non-Viability Event or a Bankruptcy Event, in either of which cases you will lose the entire value of your investment.” On the other hand, the senior debt securities, which do not contain non-viability and bankruptcy-related write-down provisions, may be subject to loss absorption in court-administered insolvency proceeding if we become subject to orderly resolution measures under the Deposit Insurance Act and Japanese insolvency laws as described below.
In November 2015, the Financial Stability Board (the “FSB”) published the final Total Loss-Absorbing Capacity standard (“TLAC standard”) for global systemically important banks (“G-SIBs”). The FSB’s TLAC standard is designed to ensure that, if a G-SIB fails, it has sufficient loss-absorbing and recapitalization capacity available in resolution to implement an orderly resolution that minimizes the impact on financial stability, thereby ensuring the continuity of critical functions and avoiding exposing public funds to loss. The FSB’s TLAC standard defines a minimum requirement for the instruments and liabilities that should be readily available to absorb losses in resolution. In April 2016, the FSA published its policy (the “FSA Approach”) describing its approach and framework for the introduction of the TLAC standard in Japan for Japanese G-SIBs, which consist of the three so-called “mega-banks” in Japan. In April 2018, the FSA published a revised version of the FSA Approach that extended the coverage of the TLAC standard in Japan to certain domestic systemically important banks (“D-SIBs”) that are deemed (i) of particular need for a cross-border resolution arrangement and (ii) of particular systemic significance to Japanese financial system if they fail. In the revised FSA Approach, we and the Japanese G-SIBs (each a “TLAC Covered SIB” and collectively the “TLAC Covered SIBs”) would be subject to the TLAC requirements in Japan. In the revised FSA Approach, the FSA also expressed its view that Single Point of Entry (“SPE”) resolution, in which resolution powers are applied to the top of a group by a single national resolution authority (i.e., the FSA), would be the preferred strategy for resolution of TLAC Covered SIBs. In March 2019, the FSA published regulatory notices, regulatory guidelines and related materials to implement the TLAC standard in Japan. The TLAC standard set forth in these FSA documents (the “Japanese TLAC Standard”), which became applicable to three Japanese G-SIBs from March 31, 2019, and became applicable to us from March 31, 2021, requires Domestic Resolution Entities (as defined below) designated for the TLAC Covered SIBs to meet certain minimum external TLAC requirements and to cause any of their material subsidiaries in Japan, as designated by the FSA as being systemically important, to maintain a certain minimum level of capital and debt having internal loss-absorbing and recapitalization capacity (together with the internal loss-absorbing and recapitalization capacity that foreign subsidiaries are required to maintain under the FSB’s TLAC standard or similar requirements in the relevant jurisdictions, “Internal TLAC”). In keeping with its stated preference for SPE resolution, the FSA designated as resolution entities in Japan (the “Domestic Resolution Entities”) the ultimate holding company in Japan of each TLAC Covered SIB. Under the Japanese TLAC Standard, the FSA designated Nomura Holdings, Inc., as the Domestic Resolution Entity for the Nomura Group, which is subject to the external TLAC requirements in Japan, and also designated the Nomura Securities Co., Ltd. and Nomura Financial Products & Services, Inc., as our material subsidiaries in Japan, which are subject to the Internal TLAC requirements in Japan.
Under the Japanese TLAC Standard, unsecured senior debt issued by the Domestic Resolution Entity for a TLAC Covered SIB is not required to include any contractual write-down, write-off or conversion provisions in order to qualify as external TLAC debt. In addition, unsecured senior debt issued by the Domestic Resolution Entity for a TLAC Covered SIB is not required to include any subordination provisions in order to qualify as external TLAC debt, so long as the Domestic Resolution Entity’s creditors are recognized as structurally subordinated to the creditors of its subsidiaries and affiliates by the FSA on the grounds that the amount of excluded liabilities as defined in the Japanese TLAC Standard of such Domestic Resolution Entity ranking pari passu or junior to its unsecured senior liabilities does not exceed 5% of its external TLAC in principle, while the Internal TLAC incurred by material subsidiaries of a TLAC Covered SIB is required to include the Contractual Loss Absorption Provisions and to be subordinated to such entity’s excluded liabilities. The senior debt securities are intended to qualify as external TLAC debt under the Japanese TLAC Standard due in part to their structural subordination.
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The resolution framework for financial institutions under current Japanese laws and regulations includes (i) measures applied to financial institutions that are solvent on a balance sheet basis and (ii) orderly resolution measures applied to financial institutions that have failed or are deemed likely to fail. The framework applies to banks and certain other financial institutions as well as financial holding companies, such as us. As noted above, in the revised FSA Approach published in April 2018, the FSA has expressed its view that SPE resolution would be the preferred strategy for resolution of the TLAC Covered SIBs. However, it is uncertain what resolution strategy or specific measures will be taken in a given case, and orderly resolution measures may be applied without implementing any of the measures described in (i) above. Under a possible model of SPE resolution described in the Japanese TLAC Standard, if the FSA determines that a material subsidiary in Japan of a financial institution which is subject to the Japanese TLAC Standard under the FIEA, including Nomura Holdings, Inc. is non-viable due to material deterioration in its financial condition after recognizing that it is, or is likely to be, unable to fully perform its obligations with its assets, or that it has suspended, or is likely to suspend, repayment of its obligations, by issuing an order concerning restoration of financial soundness, including recapitalization and restoration of liquidity of such material subsidiary, to the Domestic Resolution Entity for the financial institution under Article 57-19, Paragraph 1 of the FIEA, the material subsidiary’s Internal TLAC instruments will be written down or written off or, if applicable, converted into equity in accordance with the applicable Contractual Loss Absorption Provisions of such Internal TLAC instruments. Following the write-down, write-off or conversion of Internal TLAC instruments, if the Prime Minister of Japan recognizes that the financial institution is, or is likely to be, unable to fully perform its obligations with its assets, or that it has suspended, or is likely to suspend, repayment of its obligations, as a result of the financial institution’s loans to, or other investment in, its material subsidiaries in Japan, as designated by the FSA as being systemically important, or foreign subsidiaries that are subject to TLAC requirements or similar requirements imposed by a relevant foreign authority, becoming subject to loss absorption or otherwise, and further recognizes that the failure of such financial institution is likely to cause a significant disruption to the financial market or systems in Japan, the Prime Minister of Japan may, following deliberation by the Financial Crisis Management Meeting, confirm that measures set forth in Article 126-2, Paragraph 1, Item 2 of the Deposit Insurance Act (or any successor provision thereto), generally referred to as specified item 2 measures (tokutei dai nigō sochi), need to be applied to the financial institution for its orderly resolution under circumstances where the financial institution is, or is likely to be, unable to fully perform its obligations with its assets, or the financial institution has suspended, or is likely to suspend, repayment of its obligations.
Under the Applicable Capital Adequacy Regulations, any such confirmation by the Prime Minister of Japan would trigger non-viability write-down provisions of Additional Tier 1 and Tier 2 instruments issued by the financial institution, causing such instruments to be written down or written off, or if applicable, converted into equity. As such, the perpetual subordinated debt securities, which will qualify as our Additional Tier 1 Capital, will be fully and permanently written down to zero under their contractual terms upon such confirmation by the Prime Minister of Japan. See also “Risks Relating to the Perpetual Subordinated Debt Securities—The perpetual subordinated debt securities will be subject to a Write-Down and Cancellation upon the occurrence of a Non-Viability Event or a Bankruptcy Event, in either of which cases you will lose the entire value of your investment” as well as “Description of Perpetual Subordinated Debt Securities—Write-Downs and Write-Ups—Write-Down and Cancellation upon a Non-Viability Event or Bankruptcy Event (Write-Down and Cancellation).”
Under current Japanese laws and regulations, upon the application of specified item 2 measures (tokutei dai nigō sochi), a financial institution will be placed under special supervision (tokubetsu kanshi) by, or if the Prime Minister of Japan so orders, under special control (tokutei kanri) of, the Deposit Insurance Corporation. In an orderly resolution, if the financial institution is placed under special control (tokutei kanri), pursuant to Article 126-5 of the Deposit Insurance Act (or any successor provision thereto), the Deposit Insurance Corporation would control the operation and management of the financial institution’s business, assets and liabilities, including the potential transfer to a bridge financial institution established by the Deposit Insurance Corporation as its subsidiary, or such other financial institution as the Deposit Insurance Corporation may determine, of the financial institution’s systemically important assets and liabilities, which in our case would be
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expected to include the shares of Nomura Securities Co., Ltd., Nomura Financial Products & Services, Inc. and any of our other material subsidiaries in Japan that are designated as systemically important by the FSA. Under the Japanese TLAC Standard, to facilitate that transfer, the Prime Minister of Japan may prohibit by its designation creditors of the financial institution from attaching any of our assets and claims which are to be transferred to a bridge financial institution or another financial institution pursuant to Article 126-16 of the Deposit Insurance Act (or any successor provision thereto). See also “Item 4. Information on the Company—B. Business Overview—Regulation—Japan” in our most recent annual report on Form 20-F, which is incorporated herein by reference. In addition, with respect to the senior debt securities, given that they are governed by the laws of the State of New York, the terms of the senior debt securities will, in order to satisfy the requirements under the Japanese TLAC Standard, expressly limit the ability of holders of the senior debt securities to initiate any action to attach any of our assets, the attachment of which is so prohibited by the Prime Minister of Japan under Article 126-16 of the Deposit Insurance Act (or any successor provision thereto) for a period of 30 days from and including the date upon which the Prime Minister of Japan confirms that specified item 2 measures (tokutei dai nigō sochi) need to be applied to us. See “Description of Senior Debt Securities—Limitation on Actions for Attachment.” The value of assets subject to a prohibition of attachment may decline while such prohibition is in effect, and following such period, holders of the senior debt securities will be unable to attach any assets that have been transferred to a bridge financial institution or such other financial institution as part of our orderly resolution. The Deposit Insurance Corporation would also control the repayment of liabilities of the financial institution, and, ultimately, facilitate the orderly resolution of the financial institution through court-administrated insolvency proceedings. The Deposit Insurance Corporation has broad discretion in its application of these measures in accordance with the Deposit Insurance Act, Japanese insolvency laws and other relevant laws.
Under current Japanese laws and regulations, the senior debt securities are expected to become subject to loss absorption in court-administered insolvency proceedings if we become subject to specified item 2 measures (tokutei dai nigō sochi) under the Deposit Insurance Act and Japanese insolvency laws. The application of specified item 2 measures (tokutei dai nigō sochi) or other measures by, or any decision of, the Prime Minister of Japan, the Deposit Insurance Corporation or a Japanese court may result in your rights as a holder of the senior debt securities or the value of your investment in the senior debt securities being adversely affected. Under the Japanese TLAC Standard, it is currently expected that the senior debt securities will not be transferred to a bridge financial institution or other transferee in the orderly resolution process but will remain as our liabilities subject to court-administered insolvency proceedings. On the other hand, in an orderly resolution process, the shares of our material subsidiaries may be transferred to a bridge financial institution or other transferee, pursuant to the authority of the Deposit Insurance Corporation to represent and manage and dispose of our assets under Article 126-5 of the Deposit Insurance Act (or any successor provision thereto), with permission of a Japanese court in accordance with Article 126-13 of the Deposit Insurance Act (or any successor provision thereto), which permission may be granted by court in accordance with the Deposit Insurance Act if (i) the financial institution is under special supervision (tokubetsu kanshi) by, or under special control (tokutei kanri) of, the Deposit Insurance Corporation pursuant to the Deposit Insurance Act, and (ii) the financial institution is, or is likely to be, unable to fully perform its obligations with its assets, or the financial institution has suspended, or is likely to suspend, repayment of its obligations, and we would only be entitled to receive consideration representing the fair values of such shares, which could be significantly less than the book values of such shares. With respect to such transfer, given that the senior debt securities are governed by the laws of the State of New York, in order to satisfy the requirements under the Japanese TLAC Standard, holders of senior debt securities expressly acknowledge, accept, consent and agree to any transfer of our assets (including shares of our subsidiaries) or liabilities, or any portions thereof, with permission of a Japanese court in accordance with Article 126-13 of the Deposit Insurance Act (or any successor provision thereto), including any such transfer made pursuant to the authority of the Deposit Insurance Corporation to represent and manage and dispose of our assets under Article 126-5 of the Deposit Insurance Act (or any successor provision thereto). See “Description of Senior Debt Securities—Permitted Transfer of Assets or Liabilities.” Following such transfer, the recoverable value of our residual assets in court-administered insolvency proceedings may not be sufficient to fully satisfy any payment obligations that we may have under our liabilities, including the senior debt securities. Moreover, the senior debt
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securities will not be insured or guaranteed by the Deposit Insurance Corporation or any other government agency or insurer. Accordingly, the holders of the senior debt securities may lose all or a portion of their investments in the senior debt securities in court-administered insolvency proceedings.
The circumstances surrounding or triggering orderly resolution are unpredictable, and the Japanese TLAC Standard is subject to change.
The application of orderly resolution under the Deposit Insurance Act is inherently unpredictable and depends on a number of factors that may be beyond our control. The commencement of the orderly resolution process under the Deposit Insurance Act depends on, among other things, a determination by the Prime Minister of Japan, following deliberation by the Financial Crisis Management Meeting, regarding our viability, or the viability of one or more of our subsidiaries, and the risk that their failures may cause a significant disruption to the financial market or systems in Japan. Under the Japanese TLAC Standard and the Applicable Capital Adequacy Regulations, it is possible that specified item 2 measures (tokutei dai nigō sochi) may be applied to us as a result of, among other things, absorption of losses by us on our loans to, or investments in, or any other Internal TLAC or other regulatory capital instruments of, Nomura Securities Co., Ltd., Nomura Financial Products & Services, Inc. or any of our other material subsidiaries or sub-groups in Japan that are designated as systemically important by the FSA, or any of our foreign subsidiaries that are subject to TLAC requirements, the capital adequacy regulations or similar requirements imposed by a relevant foreign authority, prior to the failure of such subsidiary, pursuant to the terms of such loans, investments or other Internal TLAC or other regulatory capital instruments or in accordance with applicable Japanese or foreign laws or regulations then in effect. However, under the Japanese TLAC Standard and the Applicable Capital Adequacy Regulations, the actual measures to be taken will be determined by the relevant authorities on a case-by-case basis, and, as a result, it may be difficult to predict when, if at all, we may become subject to an orderly resolution process. Accordingly, the market value of the debt securities may not necessarily be evaluated in a manner similar to other types of securities issued by non-financial institutions or by financial institutions subject to different regulatory regimes. For example, any indication or perception that we are approaching circumstances that could result in us becoming subject to an orderly resolution process could also have an adverse effect on the market price and liquidity of the debt securities.
In addition, there has been no application of the orderly resolution measures under the Deposit Insurance Act described in this prospectus to date. Such measures are untested and will be subject to interpretation and application by the relevant authorities in Japan. It is uncertain how and under what standards the relevant authorities would determine that we are, or are deemed likely to be, unable to fully perform our obligations with our assets, or that we have suspended, or are deemed likely to suspend, repayment of our obligations in determining whether to commence an orderly resolution process, and it is possible that particular circumstances that seem similar may lead to different results. In addition, the sequence and specific actions that will be taken in connection with orderly resolution measures and their impact on the debt securities are uncertain. It is also uncertain whether a sufficient amount of assets will ultimately be available to the holders of the debt securities. Our creditors, including the holders of the debt securities, may encounter difficulty in challenging the application of orderly resolution measures to us.
The Japanese TLAC Standard requires us to maintain external TLAC eligible instruments in an amount not less than 18% of our consolidated risk-weighted assets and 6.75% of the applicable Basel III consolidated leverage ratio denominator starting from March 31, 2024 (which was increased to 7.1% from April 1, 2024 pursuant to an amendment to the TLAC regulations in Japan). In addition, under the Japanese TLAC Standard, our access to Japan’s deposit insurance fund reserves qualifies as TLAC in the amount equivalent to 3.5% of our consolidated risk-weighted assets from March 31, 2024. Although we expect the debt securities to qualify as external TLAC debt under the Japanese TLAC Standard, due in part to their structural subordination, there is no assurance that the debt securities will qualify as such, which could affect our ability to meet the minimum TLAC requirements and subject us to potential adverse regulatory action. In addition, the Japanese TLAC Standard may be subject to change and, if such changes occur, we may need to issue debt instruments in the future with terms that differ from those of the debt securities, which in turn could adversely affect the value of the debt securities.
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The Indentures and the debt securities contain very limited restrictive covenants and provide limited protection in the event of a change in control.
The Indentures and the debt securities do not contain any financial covenants or other restrictions on our ability to pledge or dispose of assets or to secure other indebtedness, pay dividends on our shares of common stock (except, in the case of the perpetual subordinated debt securities, in the case of an optional cancellation of interest payments, as described under “Description of Perpetual Subordinated Debt Securities—Cancellation of Interest Payments—Optional Cancellation of Interest Payments”), incur indebtedness or our ability to issue new securities or repurchase our outstanding securities. These or other actions by us could adversely affect our ability to pay amounts due on the debt securities. In addition, the Indentures and the debt securities do not contain any covenants or other provisions that afford more than limited protection to holders of the debt securities in the event of a change in control. See “Description of Senior Debt Securities—Mergers and Similar Transactions” and “Description of Perpetual Subordinated Debt Securities—Mergers and Similar Transactions.”
Changes in applicable laws and regulations may adversely affect the rights of holders of the debt securities.
Changes in applicable laws and regulations after the date of issuance of the debt securities may adversely affect the rights of holders, and the market value, of the debt securities. Such changes in laws and regulations may include changes in regulatory capital, liquidity and leverage requirements and loss-absorption and tax regimes as well as additional restrictions on our business operations, which may have an adverse effect on an investment in the debt securities.
Any legislative and regulatory uncertainty may also negatively affect an investor’s ability to accurately value the debt securities and, therefore, negatively affect the trading price of the debt securities given the impact on the debt securities that one or more legislative or regulatory changes or interpretations, including those described above, could have on the debt securities.
Risks Relating to the Senior Debt Securities
We may redeem the senior debt securities at any time for tax reasons, subject to certain conditions.
We have the option at any time to redeem the senior debt securities upon the occurrence of certain tax events, as described under “Description of Senior Debt Securities—Optional Tax Redemption,” regardless of whether such redemption would be favorable or unfavorable to you. See “—Risks Relating to the Debt Securities Generally—Changes in applicable laws and regulations may adversely affect the rights of holders of the debt securities.” Any such redemption is subject to certain conditions, including our obtaining prior confirmation of the FSA (if such confirmation is required under the FIEA or any other applicable laws and regulations then in effect).
Any decision by us as to whether we will exercise our option to redeem the senior debt securities upon the occurrence of certain tax events will be made at our absolute discretion, subject to certain conditions. Our decision may be influenced by factors such as, but not limited to, the economic impact of exercising such option to redeem the senior debt securities, any tax consequences, the applicable TLAC and other regulatory requirements and the prevailing market conditions.
You will not have the right to request the redemption of the senior debt securities. As a result, you may be required to bear the financial risks of an investment in the senior debt securities until maturity. You should not invest in the senior debt securities with the expectation that we will exercise our option to redeem them upon the occurrence of certain tax events. On the other hand, if we redeem the senior debt securities upon the occurrence of certain tax events, you may not be able to reinvest the redemption proceeds in financial instruments offering a yield comparable to that on the senior debt securities. Furthermore, the redemption feature of the senior debt securities (and, in particular, any market perception that a call right may be exercised) may limit their market value (in particular, the likelihood that such market value would rise higher than the potential redemption price).
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Risks Relating to the Perpetual Subordinated Debt Securities
The perpetual subordinated debt securities will be subject to a Write-Down and Cancellation upon the occurrence of a Non-Viability Event or a Bankruptcy Event, in either of which cases you will lose the entire value of your investment.
The perpetual subordinated debt securities are intended to qualify as our Additional Tier 1 Capital under the Applicable Capital Adequacy Regulations and, accordingly, contain non-viability and bankruptcy-related write-down provisions. Under such provisions, the perpetual subordinated debt securities will be subject to a Write-Down and Cancellation (as defined, along with the other capitalized terms in this paragraph, in “Description of Perpetual Subordinated Debt Securities—Write-Downs and Write-Ups—Write-Down and Cancellation upon a Non-Viability Event or Bankruptcy Event (Write-Down and Cancellation)”) either (i) on the Write-Down and Cancellation Date if a Non-Viability Event occurs or (ii) immediately upon the occurrence of a Bankruptcy Event if a Bankruptcy Event occurs. In each case, the full principal amount of the perpetual subordinated debt securities will be permanently written down to zero, the perpetual subordinated debt securities will be cancelled and you will be deemed to have irrevocably waived your right to claim or receive any payment of principal of or interest on the perpetual subordinated debt securities (including any additional amounts with respect thereto) unless such payments have become due and payable on or before the date of the occurrence of the Non-Viability Event or the Bankruptcy Event, as applicable, and remain unpaid, as further described in “Description of Perpetual Subordinated Debt Securities—Write-Downs and Write-Ups—Write-Down and Cancellation upon a Non-Viability Event or Bankruptcy Event (Write-Down and Cancellation).”
A Non-Viability Event will be deemed to have occurred for purposes of the perpetual subordinated debt securities at the time when the Prime Minister of Japan confirms (nintei) that specified item 2 measures (tokutei dai nigō sochi), which are the measures set forth in Article 126-2, Paragraph 1, Item 2 of the Deposit Insurance Act (or any successor provision thereto), need to be applied to us under circumstances where we are, or are deemed likely to be, unable to fully perform our obligations with our assets, or that we have suspended, or are deemed likely to suspend, repayment of our obligations. By subscribing for, purchasing or otherwise acquiring the perpetual subordinated debt securities, holders of the perpetual subordinated debt securities will be deemed to have agreed to be bound by any Write-Down and Cancellation triggered by any such confirmation made by the Prime Minister of Japan. A Bankruptcy Event will be deemed to have occurred for purposes of the perpetual subordinated debt securities in the event that bankruptcy proceedings, corporate reorganization proceedings, civil rehabilitation proceedings or special liquidation proceedings (tokubetsu seisan) are commenced against us in Japan or we become subject to bankruptcy, corporation reorganization, civil rehabilitation, special liquidation or other equivalent proceeding pursuant to any applicable law of any jurisdiction other than Japan.
If a Non-Viability Event or a Bankruptcy Event occurs, it is expected that a Write-Down and Cancellation would take place before the determination on the treatment of our remaining liabilities, shares or other securities without similar write-down features. Upon the occurrence of a Non-Viability Event or a Bankruptcy Event, a Write-Down and Cancellation of the perpetual subordinated debt securities will occur even if we have, or are restructured including by such Write-Down and Cancellation to have, sufficient assets available to fulfill our obligations under, or settle the claims of holders of, the perpetual subordinated debt securities or other liabilities that rank pari passu with or junior to the perpetual subordinated debt securities, or any classes of shares, in each case that do not contain similar write-down provisions, and even if such other liabilities or shares remain outstanding after the occurrence of a Non-Viability Event or a Bankruptcy Event, as applicable. In the case of a Non-Viability Event, under current Japanese laws and regulations, none of such liabilities or shares that do not contain similar write-down provisions will be generally subject to any Write-Down or Conversion (as defined in “Description of Perpetual Subordinated Debt Securities—Write-Downs and Write-Ups—Write-Down upon a Capital Ratio Event (Going Concern Write-Down)”), unless we become subject to court-administered insolvency proceedings, which may not occur even if a Non-Viability Event occurs. In the case of a Bankruptcy Event, under current Japanese insolvency laws, such liabilities or shares that do not contain similar write-down provisions may not become subject to a full write-down in an insolvency proceeding, including due to the amount of our residual assets. As a result, in either case, the holders of the perpetual subordinated debt securities
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may also recover less ratably, if at all, than the holders of liabilities that rank pari passu with or junior to the perpetual subordinated debt securities, or any classes of shares, in each case that do not contain similar write-down provisions.
Furthermore, except for claims for payments under the perpetual subordinated debt securities that have become due and payable on or before the date of the occurrence of a Non-Viability Event or a Bankruptcy Event, as applicable, upon the occurrence of a Non-Viability Event or a Bankruptcy Event, you will have no rights whatsoever under the perpetual subordinated debt securities or the Perpetual Subordinated Debt Securities Indenture to take any action or enforce any rights or to instruct the Perpetual Subordinated Debt Securities Trustee (as defined in “Description of Perpetual Subordinated Debt Securities—General”) to take any action or enforce any rights whatsoever, may not exercise, claim or plead any right of set-off, compensation or retention in respect of any amount owed to you by us under, or in connection with, the perpetual subordinated debt securities, and will not be entitled to make any claim in any bankruptcy, insolvency, liquidation or similar proceedings involving us or have any ability to initiate or participate in any such proceedings. Upon the occurrence of a Non-Viability Event or a Bankruptcy Event, you will not receive any shares or other participation rights in the Company or be entitled to any other participation in the upside potential of any equity or debt securities of the Company, or be entitled to any compensation in the event of any change in the Company’s potential recovery.
In addition, you will have no right to receive any compensation whatsoever for any loss resulting from a delay between the occurrence of a Non-Viability Event or a Bankruptcy Event and your receipt of any notice of the ensuing principal write-down or between the occurrence of a Non-Viability Event or a Bankruptcy Event and DTC’s processing of any relevant write-down notice. See “—Following a Non-Viability Event, a Bankruptcy Event or a Capital Ratio Event, clearance and settlement of the perpetual subordinated debt securities will be suspended and may not be completed as expected or at all.”
By subscribing for, purchasing or otherwise acquiring the perpetual subordinated debt securities, holders of the perpetual subordinated debt securities will be deemed to have agreed to the foregoing.
The perpetual subordinated debt securities will be subject to a Going Concern Write-Down upon the occurrence of a Capital Ratio Event, in which case you will lose all or part of the value of your investment.
The perpetual subordinated debt securities are intended to qualify as our Additional Tier 1 Capital and contain capital inadequacy write-down provisions. Under such provisions, a Capital Ratio Event will be deemed to have occurred for purposes of the perpetual subordinated debt securities when our consolidated Common Equity Tier 1 ratio declines below 5.125% as described (and as the relevant terms are defined) under “Description of Perpetual Subordinated Debt Securities—Write-Downs and Write-Ups—Write-Down upon a Capital Ratio Event (Going Concern Write-Down).” If a Capital Ratio Event occurs, the perpetual subordinated debt securities will be subject to a Going Concern Write-Down on the Going Concern Write-Down Date as described under “Description of Perpetual Subordinated Debt Securities—Write-Downs and Write-Ups—Write-Down upon a Capital Ratio Event (Going Concern Write-Down),” which means that the principal amount of the perpetual subordinated debt securities will be written down to such extent determined necessary by us in consultation with the FSA that such Going Concern Write-Down and a write-down of the principal amount of (or conversion into equity, if applicable, of) all other outstanding debt securities that are intended to qualify as our Additional Tier 1 Capital, which is triggered by the same Capital Ratio Event, will result in an increase in our consolidated Common Equity Tier 1 ratio to a sufficient level exceeding 5.125%. If this capital inadequacy write-down mechanism, when implemented to the full extent, is expected to result in an increase in our consolidated Common Equity Tier 1 ratio to a level short of 5.125%, the principal amount of the perpetual subordinated debt securities per $1,000 in Original Principal Amount (as defined in “Description of Perpetual Subordinated Debt Securities—Interest”) will be reduced to one cent per $1,000 of the Original Principal Amount, and no interest will accrue on the perpetual subordinated debt securities thereafter. You will be deemed to have irrevocably waived your right to claim or receive payments of principal of or interest on the perpetual subordinated debt securities (including any additional amounts with respect thereto) to the extent of such Going Concern
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Write-Down unless such payments have become due and payable on or before the date of the occurrence of the Capital Ratio Event and remain unpaid or unless and to the extent any portion of the principal amount that has previously been so written down is reinstated in accordance with write-up provisions under the perpetual subordinated debt securities and the Perpetual Subordinated Debt Securities Indenture.
There has been no implementation to date under Applicable Capital Adequacy Regulations of a going concern write-down of additional tier 1 debt securities. The amount that would be sufficient to restore our consolidated Common Equity Tier 1 ratio above 5.125% is not necessarily the exact amount by which it exceeds 5.125%, and will be determined by us in consultation with the FSA and taking all other relevant considerations applicable at the relevant time. It is uncertain as to what level above 5.125% would be considered sufficient to restore our Common Equity Tier 1 ratio at any time, and it is possible that similar circumstances may lead to different results. As a result, it is difficult to predict the level of any Going Concern Write Down that may be determined upon occurrence of a Capital Ratio Event.
Upon the occurrence of a Capital Ratio Event, a Going Concern Write-Down of the perpetual subordinated debt securities will occur even if we have, or are restructured including by such Going Concern Write-Down to have, sufficient assets available to fulfill our obligations under, or settle the claims of holders of, the perpetual subordinated debt securities or other liabilities that rank pari passu with or junior to the perpetual subordinated debt securities, or any classes of shares, in each case that do not contain similar write-down provisions, and even if such other liabilities or shares remain outstanding after the occurrence of the Capital Ratio Event. Under current Japanese laws and regulations, none of such liabilities or shares that do not contain similar write-down provisions will be generally subject to any Write-Down or Conversion, unless we become subject to court-administered insolvency proceedings, which may not occur even if a Capital Ratio Event occurs. As a result, the holders of the perpetual subordinated debt securities may also recover less ratably, if at all, than the holders of liabilities that rank pari passu with or junior to the perpetual subordinated debt securities, or any classes of shares, in each case that do not contain similar write-down provisions.
Furthermore, except for claims for payments under the perpetual subordinated debt securities that have become due and payable on or before the date of the occurrence of a Capital Ratio Event or to the extent of any remaining principal amount of the perpetual subordinated debt securities, upon the occurrence of a Capital Ratio Event, you will have no rights whatsoever under the perpetual subordinated debt securities or the Perpetual Subordinated Debt Securities Indenture to take any action or enforce any rights or to instruct the Perpetual Subordinated Debt Securities Trustee to take any action or enforce any rights whatsoever, may not exercise, claim or plead any right of set-off, compensation or retention in respect of any amount owed to you by us under, or in connection with, the perpetual subordinated debt securities, and will not be entitled to make any claim in any bankruptcy, insolvency, liquidation or similar proceedings involving us or have any ability to initiate or participate in any such proceedings, in each case, to the extent such right, instruction, exercise, claim and pleading, pertains to principal of the perpetual subordinated debt securities that have been or will be subject to a Going Concern Write-Down as a result of Capital Ratio Event having occurred, or interest thereon. Upon the occurrence of a Capital Ratio Event, you will not receive any shares or other participation rights in the Company or be entitled to any other participation in the upside potential of any equity or debt securities of the Company, or be entitled to any compensation in the event of any change in the Company’s potential recovery, except for any optional write-up.
Moreover, although the perpetual subordinated debt securities have an optional write-up feature as described in “Description of Perpetual Subordinated Debt Securities—Write-Downs and Write-Ups—Write-Up upon a Return to Financial Health,” such write-up option is subject to our sole discretion and may not be exercised in practice following any Going Concern Write-Down. You should not invest in the perpetual subordinated debt securities with the expectation that we will exercise this option.
In addition, you will have no right to receive any compensation whatsoever for any loss resulting from a delay between the occurrence of a Capital Ratio Event and your receipt of any notice of the ensuing principal
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write-down or between the occurrence of a Capital Ratio Event and DTC’s processing of any relevant write-down notice. See “—Following a Non-Viability Event, a Bankruptcy Event or a Capital Ratio Event, clearance and settlement of perpetual subordinated debt securities will be suspended and may not be completed as expected or at all.”
If the perpetual subordinated debt securities have been subject to one or more Going Concern Write-Downs, unless such written down amount has been reinstated in full, we do not have the option to redeem the perpetual subordinated debt securities after the fifth year anniversary of their issuance, except upon the occurrence of certain tax events or our determination that there is more than an insubstantial risk that the perpetual subordinated debt securities may no longer be partially or fully included in our Additional Tier 1 Capital. Accordingly, your ability to recover any remaining value in your investment in the perpetual subordinated debt securities, even if not fully written down, may be severely impaired.
By subscribing for, purchasing or otherwise acquiring the perpetual subordinated debt securities, holders of the perpetual subordinated debt securities will be deemed to have agreed to the foregoing.
The circumstances surrounding or triggering a Non-Viability Event or a Capital Ratio Event, including future regulatory changes, are unpredictable.
The occurrence of a Non-Viability Event, and therefore a Write-Down and Cancellation, is inherently unpredictable and depends on a number of factors that may be beyond our control. Similarly, the occurrence of a Capital Ratio Event, and therefore a Going Concern Write-Down, is inherently unpredictable and depends on a number of factors, any of which may be outside our control. These factors are discussed in detail in the paragraphs under the relevant subheadings below. As a result of this uncertainty, the market value of the perpetual subordinated debt securities may not necessarily fluctuate in a manner similar to other types of debt securities issued by non-financial institutions or by financial institutions subject to different regulatory regimes. In addition, the trading behavior of the perpetual subordinated debt securities may not necessarily follow the trading behavior of other types of securities. Any indication or perception that we are approaching circumstances that could result in a Non-Viability Event or a Capital Ratio Event occurring may also have an adverse effect on the market price and liquidity of the perpetual subordinated debt securities.
Furthermore, future regulatory or legislative developments, including relating to the Applicable Capital Adequacy Regulations, or other factors (including changes in the official positions regarding application or interpretation of applicable laws and regulations) could lead to our issuing any subordinated debt securities in the future that have a write-down (or equity conversion) provision with procedures different from the Write-Down and Cancellation provisions or the Going Concern Write-Down provisions of the perpetual subordinated debt securities and that may have terms more favorable to holders of such securities compared to the perpetual subordinated debt securities. Such developments or other factors could also lead to our exercising the option to redeem the perpetual subordinated debt securities if the perpetual subordinated debt securities should no longer be treated as our Additional Tier 1 Capital under. As a consequence, the value of the perpetual subordinated debt securities could be adversely affected.
Factors that may lead to the Occurrence of a Non-Viability Event
The occurrence of a Non-Viability Event is dependent upon, among other things, a determination by the Prime Minister of Japan, following deliberation by the Financial Crisis Management Meeting, pursuant to the Deposit Insurance Act, regarding our viability, or the viability of one or more of our subsidiaries, and the risk that their failures may cause a significant disruption to the financial market or systems in Japan. Under the Japanese TLAC Standard and the Applicable Capital Adequacy Regulations, it is possible that specified item 2 measures may be applied to us as a result of, among other things, absorption of losses by us on our loans to or investments in, or any other Internal TLAC or other regulatory capital instruments of, any of its material subsidiaries in Japan that are designated as systemically important by the FSA (which, in our case, are Nomura
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Securities Co., Ltd. and Nomura Financial Products & Services, Inc.) or any of our foreign subsidiaries that are subject to TLAC, the capital adequacy regulations or similar requirements in the relevant jurisdiction pursuant to the terms of such loans, investments or other Internal TLAC or other regulatory capital instruments or in accordance with applicable Japanese or foreign laws or regulations then in effect. However, under the Japanese TLAC Standard and the Applicable Capital Adequacy Regulations, what measures to be actually taken will be determined by the relevant authorities on a case-by-case basis, and, as a result, it is difficult to predict when, if at all, the Prime Minister of Japan may confirm that specified item 2 measures need to be applied to us, which triggers the occurrence of a Non-Viability Event. See also “Item 4. Information on the Company—B. Business Overview—Regulation—Japan” in our most recent annual report on Form 20-F, which is incorporated herein by reference.
In addition, there has been no implementation of specified item 2 measures under the Deposit Insurance Act to date. Such measures are untested and will be subject to interpretation and application by the relevant authorities in Japan. It is uncertain how and under what standards the relevant authorities in Japan would determine that we are, or are deemed likely to be, unable to fully perform our obligations with our assets, or that we have suspended, or are deemed likely to suspend, repayment of our obligations in determining whether to apply specified item 2 measures, which determination would trigger a Non-Viability Event under the perpetual subordinated debt securities. It is possible that particular circumstances that seem similar may lead to different results. For example, it is possible that the FSA determines that one of our material subsidiaries is non-viable due to material deterioration in its financial condition, even if its regulatory capital ratios are sufficiently higher than the minimum requirements, and requires the material subsidiary’s Internal TLAC instruments or other regulatory capital instruments to be written off, and following the write-off of such Internal TLAC instruments or other regulatory capital instruments, the Prime Minister of Japan confirms that specified item 2 measures need to be applied to us based on its determination that we are, or are deemed likely to be, unable to fully perform our obligations with our assets. Our creditors, including the holders of the perpetual subordinated debt securities, may encounter difficulty in challenging the application of specified item 2 measures or other orderly resolution measures to us.
Factors that may lead to the Occurrence of a Capital Ratio Event
A Capital Ratio Event may occur on any date on which we report or publicly announce that our consolidated Common Equity Tier 1 ratio has fallen below 5.125% as determined in accordance with Applicable Capital Adequacy Regulations. Although we currently publicly report our consolidated Common Equity Tier 1 ratio only on a quarterly basis, the FSA, as part of its supervisory activity, may require us to calculate and report such ratio as of any date followed by an inspection by the FSA.
Changes in our consolidated Common Equity Tier 1 ratio may be caused by changes in the amount of our Common Equity Tier 1 Capital and/or risk-weighted assets under the Applicable Capital Adequacy Regulations. Accordingly, our consolidated Common Equity Tier 1 ratio could be affected by one or more factors, including changes in, or our decision relating to, our business and our future earnings, dividend payments and share buybacks, regulatory changes (including changes to definitions, interpretations and calculations of regulatory capital ratios and their components, including Common Equity Tier 1 Capital and risk-weighted assets), revisions to models used by us to calculate our capital requirements (or revocation of, or amendments to, the regulatory permissions for using such models), actions that we are required to take at the discretion of the FSA or other relevant Japanese supervisory authorities, accounting rule changes, tax law changes, our decision or ability to manage risk-weighted assets in both our ongoing businesses and those we may seek to exit, our decision or ability to refinance regulatory capital instruments under terms and conditions similar or more favorable compared to prior financing, securities market fluctuations, and foreign currency movements. See “Item 3. Key Information—D. Risk Factors—18. Our business is subject to substantial legal, regulatory and reputational risks—(3) Tightening of regulations applicable to the financial system and financial industry could adversely affect our business, financial condition and results of operations” and “Item 4. Information on the Company—B. Business Overview—Regulation—Japan” in our most recent annual report on Form 20-F or any subsequent update thereto.
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Any of the foregoing and other changes and variables may individually or in the aggregate negatively affect our consolidated Common Equity Tier 1 ratio and thus increase the risk of the occurrence of a Capital Ratio Event at any time, which would lead to a Going Concern Write-Down, as a result of which you could lose all or part of the value of your investment in the perpetual subordinated debt securities. The market price of the perpetual subordinated debt securities is expected to be affected by changes in our consolidated Common Equity Tier 1 ratio. We may decide not to take any measures, including raising capital at a time when it is feasible to do so, even if our failure to take such an action would result in the occurrence of a Capital Ratio Event. Our decisions could cause you to lose all or part of the value of your investment in the perpetual subordinated debt securities due to their effect on our Common Equity Tier 1 ratio, but you will not have any claim against us relating to such decisions, even if they result in the occurrence of a Capital Ratio Event. We will have no obligation to consider the interests of the holders of the perpetual subordinated debt securities when making decisions relating to our businesses and operations, including in respect of our capital management. As a result, in making such decisions, our interests may not be aligned with those of the holders of the perpetual subordinated debt securities.
We may cancel interest payments on the perpetual subordinated debt securities, in whole or in part, at any time. Cancelled interest will not be due and will not accumulate or be payable at any time thereafter, and you will have no rights with respect to cancelled interest.
Under the terms of the perpetual subordinated debt securities, interest payments on the perpetual subordinated debt securities may be cancelled at our sole discretion, and we will have absolute discretion at all times and for any reason to cancel any interest payment, in whole or in part, that would otherwise be payable on any interest payment date, as described under “Description of Perpetual Subordinated Debt Securities—Cancellation of Interest Payments—Optional Cancellation of Interest Payments.” Interest will only be due and payable on an interest payment date to the extent it is not cancelled in accordance with the terms of the perpetual subordinated debt securities. If we determine not to make an interest payment on any interest payment date (or if we determine to make a payment of a portion, but not all, of such interest payment), such determination will be sufficient to effect the cancellation of such interest payment (or the portion of such interest payment) without any further action being taken or any other condition being satisfied and the non-payment will evidence the exercise of our determination to cancel such interest payment (or the portion of such interest payment not paid). If we cancel any scheduled interest payment, such interest payment will not be or become due and will not accumulate or be payable at any time thereafter, and in no event will you have any right to or claim against us with respect to such interest amount or be able to accelerate the principal of the perpetual subordinated debt securities as a result of such interest cancellation. Furthermore, no cancellation of interest in accordance with the terms of the perpetual subordinated debt securities will constitute a default in payment or otherwise under the terms of the perpetual subordinated debt securities and the Perpetual Subordinated Debt Securities Indenture. There can, therefore, be no assurances that you will receive interest payments in respect of the perpetual subordinated debt securities.
Notwithstanding any cancellation of interest payments, we may use funds that could have been applied to make such cancelled interest payments to meet our other obligations as they become due, including on any junior or parity liabilities (such as any other series of additional tier 1 debt securities we may issue under the Perpetual Subordinated Debt Securities Indenture), subject to certain limited restrictions (described under “Description of Perpetual Subordinated Debt Securities—Cancellation of Interest Payments”). As a result, the holders of the perpetual subordinated debt securities may also recover, if at all, less ratably than the holders of liabilities that otherwise rank pari passu with or junior to the perpetual subordinated debt securities.
If practicable, we will endeavor to provide notice of any cancellation of interest (in whole or in part) to you through DTC and to the Perpetual Subordinated Debt Securities Trustee at least ten business days prior to the relevant interest payment date, and if delayed, we will endeavor to provide such notice as soon as possible. However, failure or delay to provide such notice will not have any impact on the effectiveness of, or otherwise invalidate, any such cancellation of interest, or give you any rights as a result of such failure.
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The secondary market for the perpetual subordinated debt securities may have certain expectations with respect to our making interest payments in the future on the basis of past practice, and these expectations may be reflected in the secondary trading prices of the perpetual subordinated debt securities. However, we are under no obligation to make such payments, and any cancellation of interest payments in whole or in part would be at our sole and absolute discretion. Any such decision by us to cancel interest payments would likely result in a material adverse effect on the market value and liquidity of the perpetual subordinated debt securities.
In addition to our right to cancel (in whole or in part) interest payments at any time, the terms of the perpetual subordinated debt securities also restrict us from making interest payments on the perpetual subordinated debt securities if we have insufficient distributable funds, in which case such interest will be deemed to have been cancelled. Interest that is deemed cancelled will not be due and shall not accumulate or be payable at any time thereafter and you will have no rights thereto.
We will not make an interest payment on the perpetual subordinated debt securities on any interest payment date if and to the extent that the amount of funds available for payment of interest on the perpetual subordinated debt securities falls short of the amount of interest payable on the perpetual subordinated debt securities, as described under “Description of Perpetual Subordinated Debt Securities—Cancellation of Interest Payments—Mandatory Cancellation of Interest Payments due to Interest Payable Amount Limitation.” The amount of such available funds in respect of any interest payment date will be an amount equal to (1) our distributable amount as defined in the Companies Act of Japan (Act No. 86 of 2005, as amended) (the “Companies Act”) on such date (after deducting the sum of any dividends or interest that has been paid on the perpetual subordinated debt securities and any of our liabilities that are subject to substantially the same terms in respect of rights of interest payments as those of the perpetual subordinated debt securities, and any securities effectively ranking junior in right of interest payments to the perpetual subordinated debt securities in respect of either of the terms, as described under “Description of Perpetual Subordinated Debt Securities—Cancellation of Interest Payments—Optional Cancellation of Interest Payments” or “Description of Perpetual Subordinated Debt Securities—Cancellation of Interest Payments—Mandatory Cancellation of Interest Payments due to Interest Payable Amount Limitation,” from the beginning of the fiscal year in which such date falls until the day immediately prior to such date), multiplied by (2) the quotient of (i) the amount of interest payable on the perpetual subordinated debt securities on the interest payment date divided by (ii) the sum of interest payable on the perpetual subordinated debt securities and dividends or interest payable on most senior ranking class of preferred shares in our capital, if any, and any other securities that are subject to substantially the same terms in respect of rights of interest payments as those of the perpetual subordinated debt securities as described under “Description of Perpetual Subordinated Debt Securities—Cancellation of Interest Payments—Optional Cancellation of Interest Payments” or “Description of Perpetual Subordinated Debt Securities—Cancellation of Interest Payments—Mandatory Cancellation of Interest Payments due to Interest Payable Amount Limitation,” on the same interest payment date. Our distributable amount is the amount of surplus of our net assets over our capital and statutory reserves with adjustments calculated on a non-consolidated basis under the accounting principles generally accepted in Japan in accordance with the Companies Act. Any adverse change in our financial position or profitability, or our distributable amount, as calculated on an unconsolidated basis, may have a material adverse effect on our ability to make interest payments on the perpetual subordinated debt securities.
Any interest cancelled in respect of the perpetual subordinated debt securities on any relevant interest payment date will not be due and will not accumulate or be payable at any time thereafter, and you will have no rights thereto or to receive any additional interest or compensation as a result of such cancellation or deemed cancellation. Furthermore, no cancellation of interest in accordance with the terms of the perpetual subordinated debt securities will constitute a default in payment or otherwise under the terms of the perpetual subordinated debt securities and the Perpetual Subordinated Debt Securities Indenture.
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If practicable, we will endeavor to provide notice of any cancellation of interest (in whole or in part) to you through DTC and to the Perpetual Subordinated Debt Securities Trustee at least ten business days prior to the relevant interest payment date. However, failure to provide such notice will not have any impact on the effectiveness of, or otherwise invalidate, any such cancellation of interest, or give you any rights as a result of such failure.
We have outstanding parity securities and liabilities, and we may issue new parity securities or liabilities that may reduce amounts available to pay interest on the perpetual subordinated debt securities and may also issue other securities effectively having priority over the perpetual subordinated debt securities with respect to interest or dividend payments.
Under the terms of the perpetual subordinated debt securities, as described under “Description of Perpetual Subordinated Debt Securities—Cancellation of Interest Payments—Mandatory Cancellation of Interest Payments due to Interest Payable Amount Limitation,” the amount of funds available for any interest payment on the perpetual subordinated debt securities on any interest payment date will be prorated with all parity securities, which are subject to effectively the same terms in respect of rights of interest payments as those of the perpetual subordinated debt securities as described under “Description of Perpetual Subordinated Debt Securities—Cancellation of Interest Payments—Optional Cancellation of Interest Payments” or “Description of Perpetual Subordinated Debt Securities—Cancellation of Interest Payments—Mandatory Cancellation of Interest Payments due to Interest Payable Amount Limitation.”
In addition, any amount that may be otherwise allocated to an interest payment on the perpetual subordinated debt securities on an interest payment date may be reduced or depleted if we elect to pay dividends on the shares of our common or preferred stock, if any, from our distributable funds prior to such interest payment date on the perpetual subordinated debt securities. We usually pay year-end dividends in June to the holders of record of our common stock as of March 31 and semi-annual dividends in December to the holders of record of our common stock as of September 30, if we elect to pay any dividend.
Furthermore, in making any determination with respect to the payment or cancellation of any interest payments on the perpetual subordinated debt securities, we may take into consideration our contractual obligations under the perpetual subordinated debt securities as well as factors beyond any contractual limitations or obligations. In particular, even when we have the financial ability to make interest payments on the perpetual subordinated debt securities, we may determine to cancel interest payments on the perpetual subordinated debt securities in consideration of such contractual obligations related to, as well as fairness to holders of, other parity securities and liabilities, preferred shares or common shares to whom we may not be able to pay interest or dividends.
We currently have outstanding parity securities and liabilities, and we are authorized to issue additional shares of common stock and several classes of preferred shares under our articles of incorporation. The Perpetual Subordinated Debt Securities Indenture contains no restrictions on further issuances of such shares, perpetual subordinated debt securities or such parity securities and liabilities or other securities effectively having priority over the perpetual subordinated debt securities with respect to interest or dividend payments in the future, although we currently have no outstanding preferred shares. As a result, your pro rata share in any amount that may be allocated from our distributable funds to interest or dividend payments, or our ability to make interest payments on the perpetual subordinated debt securities, could be reduced or negatively affected.
Regulatory capital and other requirements may result in restrictions on our ability to make distributions in certain circumstances, in which case we may reduce or cancel interest payments on, or may be unable to redeem or repurchase, the perpetual subordinated debt securities.
The capital and other regulatory frameworks to which we are subject require us to hold certain levels of capital. A failure to hold sufficient levels of capital as required by these frameworks (as may be amended from
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time to time) may result in restrictions on distributions being applied pursuant to which we will make a determination to cancel, in whole or in part, interest payments in respect of the perpetual subordinated debt securities. Cancellation, in whole or in part, of interest payments in respect of the perpetual subordinated debt securities may affect the value of your investment in the perpetual subordinated debt securities.
Under Applicable Capital Adequacy Regulations, we are currently required, on a consolidated basis, to hold a minimum amount of total regulatory capital of 8.0% of risk weighted assets, a minimum amount of Tier 1 capital of 6.0% of risk weighted assets and a minimum amount of Common Equity Tier 1 capital of 4.5% of risk weighted assets. In addition to these minimum requirements, we are required to maintain several regulatory capital buffers, on a consolidated basis, with Common Equity Tier 1 capital. Such regulatory capital buffers, as currently applied to us, consist of a capital conservation buffer of 2.5%, a D-SIB surcharge of 0.5% and a countercyclical buffer ranging from 0% to 2.5% to be calculated as the weighted average of the buffers deployed across all of the jurisdictions to which we have credit exposures. Furthermore, under the leverage ratio regulations adopted by the FSA, we are currently required to maintain a minimum leverage ratio of 3.15%. In addition, under the Japanese TLAC Standard, we are required to maintain external TLAC eligible instruments in an amount not less than 18% of our consolidated risk-weighted assets and 7.1% of the applicable Basel III consolidated leverage ratio denominator. See also “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Regulatory changes which affect us” in our most recent annual report on Form 20-F, which is incorporated herein by reference. In addition, there may be future developments or changes in laws, regulations or rules regarding regulatory capital which may require us to reserve greater regulatory capital or buffer capital.
If we fail to meet the regulatory capital requirements and targets that are applicable to us, including if the capital buffers are used and reduced below the required level to make up for our required External TLAC ratio on a risk-weighted assets basis, under the Japanese capital distribution constraints system, the FSA may order us to submit and carry out a capital distribution constraints plan. A capital distribution constraints plan must be reasonably designed to restore the required regulatory capital buffers by restricting capital distributions, such as dividends, interest payments on the perpetual subordinated debt securities, share buybacks, redemption and repurchases of the perpetual subordinated debt securities, and bonus payments, up to a certain amount depending on the level of the deficit in our regulatory capital buffers. As a consequence, in the event that our consolidated Common Equity Tier 1 capital is insufficient to meet the regulatory capital buffer requirements applicable to us, we will make a determination to cancel interest payments, in whole or in part, in respect of the perpetual subordinated debt securities. Furthermore, if we make a determination to cancel interest payments in respect of the perpetual subordinated debt securities pursuant to a capital distribution constraints plan, we are not restricted from making any dividend or interest payments on our common shares or other liabilities. By your purchase or acquisition of the perpetual subordinated debt securities, you will be deemed to have agreed to be bound by such interest cancellation provisions in respect of the perpetual subordinated debt securities.
The perpetual subordinated debt securities constitute subordinated obligations.
The perpetual subordinated debt securities will constitute direct and unsecured obligations of ours that are conditional and perpetual and, in the event of our liquidation, subordinated to all of the existing and future obligations (including dated subordinated obligations) of ours other than liabilities under the perpetual subordinated debt securities and our liabilities that rank effectively pari passu with or subordinate to the perpetual subordinated debt securities as to liquidation distributions, and will rank pari passu with our liabilities that rank effectively pari passu with the perpetual subordinated debt securities as to liquidation distributions, subject to a principal write-down, as further described in “Description of Perpetual Subordinated Debt Securities—Subordination.”
Upon the occurrence of a Liquidation Event (as defined in “Description of Perpetual Subordinated Debt Securities—Subordination”), your right of payment as a holder of perpetual subordinated debt securities will rank senior in priority only to any payments to holders of our common shares, and our assets will be applied to
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satisfy all claims of creditors that are senior to the claims of holders of perpetual subordinated debt securities before being applied to satisfy your claims. If we do not have sufficient assets to settle claims of such senior creditors in full, your claims will not be settled and, as a result, you will lose the entire amount of your investment in the perpetual subordinated debt securities. In case of a Liquidation Event, the perpetual subordinated debt securities will share equally in payment with claims in respect of liabilities ranking pari passu as to liquidation distributions with the perpetual subordinated debt securities and the most senior ranking class of preferred shares in priority of payment as to liquidation distributions in our capital from time to time, if we do not have sufficient funds to make full payments on all of them, as applicable. In such a situation, you may lose all or part of your investment. As a practical matter, if a Non-Viability Event, Bankruptcy Event or Capital Ratio Event occurs, the principal amount of the perpetual subordinated debt securities will be written down, and as a result, you may recover, if at all, less ratably than the holders of liabilities or shares that otherwise rank pari passu with or junior to the perpetual subordinated debt securities, but that do not contain similar write-down provisions.
Subject to compliance with applicable regulatory requirements, we expect from time to time to incur additional indebtedness or other obligations that will constitute senior or subordinated indebtedness, and neither the perpetual subordinated debt securities nor the Perpetual Subordinated Debt Securities Indenture contains any provisions restricting the ability of us or our subsidiaries to incur senior or subordinated indebtedness. Although the perpetual subordinated debt securities may pay a higher rate of interest than comparable securities which are not so subordinated, you may lose all or some of your investment in the perpetual subordinated debt securities upon the occurrence of a Liquidation Event since our assets will be available for any payment to you only after all of our senior and more senior subordinated creditors have been paid in full. In the future, we may also incur indebtedness that ranks pari passu with or junior to the perpetual subordinated debt securities but are not subject to write-down provisions similar to those of the perpetual subordinated debt securities, which may provide for a higher recovery than the perpetual subordinated debt securities as a result of the effects of any write-down of the principal amount of the perpetual subordinated debt securities.
Pursuant to the provisions of the Companies Act, the holders of our liabilities (both subordinated and unsubordinated) will be required to file their claims in Japan in a liquidation proceeding (seisan) upon the occurrence of a Liquidation Event. Upon the expiration of the period for filing such claims, our liabilities under the claims filed will be performed or settled in a liquidation proceeding pursuant to the provisions of the Companies Act and other applicable laws. We will have no liability to you for any loss resulting from your failure to receive any distribution, or from any delay in the receipt thereof, in each case as a result of your (or your custodian, nominee, broker or other representative) failing to duly file their claims in Japan in a timely manner or at all.
The Perpetual Subordinated Debt Securities Indenture does not contain any limitations on our incurrence or assumption of indebtedness or other liabilities that are senior to the perpetual subordinated debt securities.
In addition, the perpetual subordinated debt securities will be structurally subordinated to the liabilities of our subsidiaries. See “—Risks Relating to the Debt Securities Generally—The debt securities will be structurally subordinated to indebtedness and other liabilities of our subsidiaries, including Nomura Securities Co., Ltd. and Nomura Financial Products & Services, Inc.”
The perpetual subordinated debt securities have no fixed maturity and no fixed redemption date and you do not have the right to accelerate the repayment of the principal amount of the perpetual subordinated debt securities.
The perpetual subordinated debt securities are perpetual securities and have no fixed maturity date or fixed redemption date. Moreover, you do not have the right to cause the perpetual subordinated debt securities to be redeemed or otherwise accelerate the repayment of the principal amount of the perpetual subordinated debt securities. As described under “Description of Perpetual Subordinated Debt Securities—Subordination,” if a
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Liquidation Event occurs and is continuing, you will only have a Liquidation Claim (as defined in “Description of Perpetual Subordinated Debt Securities—Subordination”) and any payments with respect to such Liquidation Claim will be subject to various conditions and may not be paid. Accordingly, we are under no obligation to repay or redeem (in whole or in part) the principal amount of the perpetual subordinated debt securities at any time prior to such Liquidation Event and, even upon a Liquidation Event, no payment may be made in respect of a Liquidation Claim unless the specific conditions set forth in “Description of Perpetual Subordinated Debt Securities—Subordination” have been satisfied. As a result, you may not receive any repayment of principal of the perpetual subordinated debt securities.
In addition, because the perpetual subordinated debt securities are perpetual securities, a sale of your perpetual subordinated debt securities in the secondary market may be the only means to recover your investment in the perpetual subordinated debt securities. See “—Risks Relating to the Debt Securities Generally—There are no prior markets for the debt securities and if markets develop, they may not be liquid.”
The perpetual subordinated debt securities may be traded with accrued interest, but under certain circumstances described above, such interest may be cancelled and not paid on the relevant interest payment date.
The perpetual subordinated debt securities may trade, and/or the prices for the perpetual subordinated debt securities may appear, on the trading systems with accrued interest. If this occurs, purchasers of perpetual subordinated debt securities in the secondary market may pay a price that includes such accrued interest upon purchase of the perpetual subordinated debt securities. Moreover, the secondary market for the perpetual subordinated debt securities may have certain expectations with respect to our making interest payments in the future on the basis of past practice, and these expectations may be reflected in the secondary trading prices of the perpetual subordinated debt securities. However, if a payment of interest on any interest payment date is cancelled (in each case, in whole or in part) as described herein and thus is not due and payable, purchasers of the perpetual subordinated debt securities will not be entitled to that interest payment (or if we elect to make a payment of a portion, but not all, of such interest payment, the portion of such interest payment not paid) on the relevant interest payment date.
Any cancellation of interest payments in whole or in part may, in turn, adversely affect your ability to sell your perpetual subordinated debt securities in the secondary market and, as a result, the value and liquidity of your investment in perpetual subordinated debt securities.
We may redeem the perpetual subordinated debt securities in our sole discretion on or after the fifth year anniversary of their issuance or at any time for regulatory or tax reasons, subject to certain conditions.
We may in our sole discretion redeem the perpetual subordinated debt securities in whole, but not in part, on such day falling on or after the fifth year anniversary of their issuance as may be determined by us at 100% of their principal amount plus any accrued and unpaid interest to (but excluding) the date of redemption, except to the extent of any interest cancelled in accordance with the terms of the perpetual subordinated debt securities, unless the perpetual subordinated debt securities have been subject to one or more Going Concern Write-Downs and such written down amount has not be reinstated in full on the date fixed for redemption, as described under “Description of Perpetual Subordinated Debt Securities—Repurchases and Optional Redemption—Optional Redemption.” In addition, we have the option at any time to redeem the perpetual subordinated debt securities in whole, but not in part, at 100% of their principal amount outstanding at the time plus any accrued and unpaid interest to (but excluding) the date of redemption, except to the extent of any interest cancelled in accordance with the terms of the perpetual subordinated debt securities, upon our determination that there is more than an insubstantial risk that the perpetual subordinated debt securities may no longer be partially or fully included in our Additional Tier 1 Capital, as described under “Description of Perpetual Subordinated Debt Securities—Repurchases and Optional Redemption—Optional Regulatory Redemption,” or upon the occurrence of certain tax events, as described under “Description of Perpetual Subordinated Debt Securities—Repurchases and
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Optional Redemption—Optional Tax Redemption,” regardless of whether such redemption would be favorable or unfavorable to you. Any such redemption is subject to certain conditions, including our obtaining prior confirmation of the FSA (if such confirmation is required under the FIEA or any other applicable laws and regulations then in effect). Under the Applicable Capital Adequacy Regulations, the FSA is expected not to grant any prior confirmation required for any redemption or repurchase of the perpetual subordinated debt securities unless (i) we replace the perpetual subordinated debt securities by capital instruments of an equal or higher quality under terms that are considered to be appropriate for our income capacity on or before such redemption or repurchase or (ii) we are expected to maintain our consolidated regulatory capital ratios at a level sufficiently in excess of the minimum requirements after such redemption or repurchase.
Any decision by us as to whether we will exercise our option to redeem the perpetual subordinated debt securities will be made at our absolute discretion, subject to certain conditions. Our decision may be influenced by factors such as, but not limited to, the economic impact of exercising such option to redeem the perpetual subordinated debt securities, the applicable capital, TLAC, and other regulatory requirements, any tax consequences, and the prevailing market conditions. We may, for example, decide to redeem the perpetual subordinated debt securities if the interest payable on the perpetual subordinated debt securities is greater than the interest that would be payable on our other financial instruments of comparable terms and of a comparable credit rating.
You will not have the right to request the redemption of the perpetual subordinated debt securities. As a result, you may be required to bear the financial risks of an investment in the perpetual subordinated debt securities permanently. You should not invest in the perpetual subordinated debt securities with the expectation that we will exercise our option to redeem them. On the other hand, if we redeem the perpetual subordinated debt securities, you may not be able to reinvest the redemption proceeds in financial instruments offering a yield comparable to that on the perpetual subordinated debt securities. Furthermore, the redemption feature of the perpetual subordinated debt securities (and, in particular, any market perception that a call right may be exercised) may limit their market value, which is unlikely to rise substantially above the price at which the perpetual subordinated debt securities can be redeemed.
The remedies available to you as holders of the perpetual subordinated debt securities are limited.
There is no right of acceleration in the case of non-payment of principal of or interest on the perpetual subordinated debt securities or of a failure to perform any of our obligations under or in respect of the perpetual subordinated debt securities. You may not at any time demand repayment or redemption of the principal amount of the perpetual subordinated debt securities. Moreover, by your purchase or acquisition of the perpetual subordinated debt securities, you will be deemed to have agreed to have no rights to take any action or enforce any rights or to instruct the Perpetual Subordinated Debt Securities Trustee to take any action or enforce any rights whatsoever in connection with the perpetual subordinated debt securities upon the occurrence of a Non-Viability Event, Bankruptcy Event or Capital Ratio Event.
Upon the occurrence of a Liquidation Event, the sole remedy against us practically available for recovery of amounts owing under the perpetual subordinated debt securities is that, subject to certain conditions, the Perpetual Subordinated Debt Securities Trustee, on behalf of the holders of the perpetual subordinated debt securities may, at its discretion, or will at the direction of the holders of 25% of the aggregate principal amount of the outstanding perpetual subordinated debt securities, subject to applicable laws, file liquidation claims in our liquidation proceedings.
The remedies under the perpetual subordinated debt securities are more limited than those typically available to our other creditors. For further detail regarding the limited remedies of the Perpetual Subordinated Debt Securities Trustee (acting on your behalf) and you as a holder of perpetual subordinated debt securities, see “Description of Perpetual Subordinated Debt Securities—No Events of Default or Rights of Acceleration.”
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Following a Non-Viability Event, a Bankruptcy Event or a Capital Ratio Event, clearance and settlement of perpetual subordinated debt securities will be suspended and may not be completed as expected or at all.
Upon the occurrence of a Non-Viability Event, a Bankruptcy Event or a Capital Ratio Event, we will endeavor to deliver a notice of principal write-down to the holders of the perpetual subordinated debt securities as described in “Description of Perpetual Subordinated Debt Securities—Write-Downs and Write-Ups.” In the case of a full write-down, following the receipt of such write-down notice, DTC is expected to suspend all clearance and settlement of transfers through DTC of the perpetual subordinated debt securities. Due to such suspension, you may not be able to settle any transfer of the perpetual subordinated debt securities even if the transfer is initiated prior to such suspension.
DTC’s processing of such write-down notice may only be completed after the date on which the relevant principal write-down is scheduled. No assurance can be given as to the period of time required by DTC to complete the update of its records or the availability of procedures to effect any principal write-down in a timely manner or at all. Due to such delay or unavailability, a transfer that is initiated prior to a Non-Viability Event, a Bankruptcy Event or a Capital Ratio Event, as the case may be, may fail to settle and the transferor may be unable to receive any settlement amount through DTC. On the other hand, a transfer may be settled though initiated after a Non-Viability Event, a Bankruptcy Event or a Capital Ratio Event, as the case may be, if processed before DTC’s suspension, in which case the transferee may be required to pay the settlement amount through DTC. However, no right to recover or receive compensation for any loss resulting from any such settlement or failed settlement will be available to you once a Non-Viability Event, a Bankruptcy Event or a Capital Ratio Event, has occurred, regardless of whether you have received actual or constructive notice of such fact or otherwise. See “—The perpetual subordinated debt securities will be subject to a Write-Down and Cancellation upon the occurrence of a Non-Viability Event or a Bankruptcy Event, in either of which cases you will lose the entire value of your investment” and “—The perpetual subordinated debt securities will be subject to a Going Concern Write-Down upon the occurrence of a Capital Ratio Event, in which case you will lose all or part of the value of your investment.”
As a result, notwithstanding such delay or unavailability, holders of the perpetual subordinated debt securities may lose the entire or the relevant partial value of their investment in the perpetual subordinated debt securities on the date on which the relevant full or partial principal write-down occurs. Furthermore, the conveyance of a write-down notice and settlement with respect to the perpetual subordinated debt securities following a Non-Viability Event, a Bankruptcy Event or a Capital Ratio Event will be subject to such procedures of DTC and the relevant participants as may be in effect from time to time.
The Perpetual Subordinated Debt Securities Indenture contains no restrictions on our ability to incur future indebtedness, pledge or dispose of our assets, or make dividend or other payments and provides limited protection against significant corporate events and other actions we may take that could adversely impact your investment in the perpetual subordinated debt securities.
The Perpetual Subordinated Debt Securities Indenture contains no restrictions on the amount of securities or other liabilities which we may issue, incur or guarantee, including secured obligations and unsecured obligations that rank senior to the perpetual subordinated debt securities or that rank pari passu with the perpetual subordinated debt securities. In the future, we may also incur indebtedness that ranks pari passu with or junior to the perpetual subordinated debt securities but is not subject to write-down provisions similar to the perpetual subordinated debt securities. An increase in the outstanding amount of such securities or other liabilities may limit our ability to meet the obligations under the perpetual subordinated debt securities, thereby increasing the likelihood of cancellation of interest payments, and may also reduce the amount recoverable by you upon our liquidation.
Except as required by applicable capital, liquidity and other regulatory requirements, and except in cases where we are restricted from making dividend or interest payments as described under “Description of Perpetual
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Subordinated Debt Securities—Cancellation of Interest Payments,” the Perpetual Subordinated Debt Securities Indenture also contains no restrictions on our ability to pledge or dispose of our assets, make investments, or repurchase shares or pay dividends or make other payments in respect of our common stock or other securities, any of which could adversely affect our ability to pay our obligations under the perpetual subordinated debt securities.
In addition, except as required by applicable capital, liquidity and other regulatory standards, the Perpetual Subordinated Debt Securities Indenture contains no financial covenants, including those requiring us to maintain any financial ratios or specific levels of net worth, revenues, income, cash flow or liquidity. You are not protected under the Perpetual Subordinated Debt Securities Indenture in a merger or other change of control event, except to the extent described under “Description of Perpetual Subordinated Debt Securities—No Events of Default or Rights of Acceleration.”
The amount of any interest cancellation, principal write-down or write-up, or recovery in proceedings in Japan on the perpetual subordinated debt securities may be calculated and determined in Japanese yen, and you will not be compensated for any currency exchange loss resulting from any conversion of such amount into U.S. dollars.
If any interest payment in respect of the perpetual subordinated debt securities is cancelled, in whole or in part, or if any portion of the principal amount of the perpetual subordinated debt securities is written down or written up, we expect the amount of such interest cancellation or principal write-down or write-up to be calculated and determined based on our financial, regulatory capital ratio and other information prepared in Japanese yen and the terms of the perpetual subordinated debt securities.
We expect to determine the value of any such amounts converted into U.S. dollars in a manner we deem appropriate and apply it to the perpetual subordinated debt securities. In addition, if any recovery is obtained on the perpetual subordinated debt securities in liquidation or other proceedings in Japan, the amount of such recovery may be denominated only in Japanese yen. As a result, the value of any such amount when and as converted into U.S. dollars will change, depending on the currency exchange rate applied at any given time, and fluctuations in the applicable currency exchange rate may increase your risk of loss on your investment in the perpetual subordinated debt securities if and to the extent you are managing your investment in U.S. dollars or any currencies other than the Japanese yen. Furthermore, any period of delay between the time when any such amount is determined in Japanese yen and the time when such amount is converted into U.S. dollars may further increase your risk of loss as the applicable currency exchange rate may fluctuate during such period. No interest or other compensation is payable on or for any loss incurred due to the impact of currency exchange rate fluctuations on your investment in the perpetual subordinated debt securities.
The perpetual subordinated debt securities may be assigned a credit rating below investment grade, in which case the perpetual subordinated debt securities will be subject to the risks associated with non-investment grade securities.
Because of their subordinated status, the perpetual subordinated debt securities are expected to be assigned a credit rating below that of our senior indebtedness at issuance, which may be below investment grade. Also, in the event of a downgrade in our credit ratings after the issuance of any perpetual subordinated debt securities, the ratings of such securities may fall below investment grade. See “—Risks Relating to the Debt Securities Generally—The ratings of the debt securities may change after the issuance of the debt securities, and those changes may have an adverse effect on the market prices and liquidity of the debt securities.” In either such case, the perpetual subordinated debt securities will be subject to a higher risk of price volatility than higher-rated securities. Furthermore, decreases in our capital ratios, negative changes in our liquidity conditions, increases in our leverage or deteriorating outlooks for us, or volatile markets, could lead to a significant deterioration in market prices of below-investment grade rated securities.
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CAPITALIZATION AND INDEBTEDNESS
The following table sets forth our consolidated capitalization and indebtedness as of September 30, 2024. You should read this table in conjunction with the consolidated financial statements and related notes incorporated by reference in this prospectus.
| As of September 30, 2024 |
||||
| Actual | ||||
| (millions of yen) | ||||
| Short-term borrowings |
¥ | 897,073 | ||
| Long-term borrowings |
13,048,498 | |||
| NHI shareholders’ equity: |
||||
| Common stock—no par value (Authorized: 6,000,000,000 shares; Issued: 3,163,562,601 shares; Outstanding: 2,955,024,538 shares) |
594,493 | |||
| Additional paid-in capital |
683,561 | |||
| Retained earnings |
1,794,479 | |||
| Accumulated other comprehensive income |
372,729 | |||
| Common stock held in treasury, at cost (208,538,063 shares) |
(144,501 | ) | ||
| Total NHI shareholders’ equity |
3,300,761 | |||
| Noncontrolling interests |
95,625 | |||
|
|
|
|||
| Total equity |
3,396,386 | |||
|
|
|
|||
| Total Capitalization and Indebtedness |
¥ | 17,341,957 | ||
|
|
|
|||
There has been no material change in our consolidated capitalization and indebtedness since September 30, 2024.
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DESCRIPTION OF SENIOR DEBT SECURITIES
The following is a summary of certain general terms and provisions of the senior debt securities that we may offer under this prospectus. The specific terms and provisions of a particular series of senior debt securities to be offered, and the extent, if any, to which the general terms and provisions summarized below apply to such senior debt securities, will be described in an applicable prospectus supplement or free writing prospectus that we authorize to be delivered in connection with such offering. If there is any inconsistency between the general terms and provisions presented here and those in the applicable prospectus supplement or free writing prospectus, those in the applicable prospectus supplement or free writing prospectus will apply.
Because this section is a summary, it does not describe every aspect of the senior debt securities. It is qualified in its entirety by the provisions of the Senior Debt Securities Indenture (as described below) and the senior debt securities, forms of which will be filed as exhibits to a current report on Form 6-K in connection with an offering of the relevant series of senior debt securities. You should refer to those documents for additional information.
General
We may issue senior debt securities from time to time, in one or more series under a senior debt indenture between us and Citibank, N.A., as trustee, dated as of January 16, 2020, as amended or supplemented from time to time. The senior debt indenture is referred to in this prospectus as the “Senior Debt Securities Indenture” (including, as required by the context, as may be amended or supplemented from time to time), and the trustee is referred to in this prospectus as the “Senior Debt Securities Trustee.” The Senior Debt Securities Indenture is qualified under the Trust Indenture Act. The Senior Debt Securities Indenture is included as an exhibit to the registration statement of which this prospectus forms a part. Any supplemental indentures will be submitted to the SEC on a Form 6-K or by a post-effective amendment to the registration statement of which this prospectus is a part.
The Senior Debt Securities Indenture provides that we may issue senior debt securities up to an aggregate principal amount as we may authorize from time to time. The Senior Debt Securities Indenture and the senior debt securities do not limit our ability to incur other indebtedness or to issue other securities. Also, we are not subject to financial or similar restrictions by the terms of the senior debt securities.
The senior debt securities will be our direct, unconditional, unsubordinated and unsecured obligations and rank pari passu and without preference among themselves and with all other unsecured obligations, other than our subordinated obligations (except for statutorily preferred exceptions) from time to time outstanding.
Terms Specified in the Applicable Prospectus Supplement or Free Writing Prospectus
The applicable prospectus supplement or free writing prospectus will specify, if applicable, the following terms of and other information relating to a particular series of senior debt securities being offered. Such information may include:
| • | the issue date of the senior debt securities; |
| • | the title and type of the senior debt securities of the series (which shall distinguish the senior debt securities of the series from all other senior debt securities); |
| • | the ranking of the senior debt securities; |
| • | the initial aggregate principal amount of the senior debt securities and any limits upon the total aggregate principal amount of such senior debt securities; |
| • | the issue price at which we originally issue the senior debt securities, expressed as a percentage of the principal amount, and the original issue date; |
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| • | the denominations in which the senior debt securities shall be issuable; |
| • | the coin or currency in which the senior debt securities are denominated or in which principal, premium, if any, and interest, if any, is payable; |
| • | the date or dates on which the principal and premium, if any, of the senior debt securities is payable; |
| • | the rate or rates (which may be fixed or variable) at which the senior debt securities will bear interest, and the manner of calculating such rate or rates, if applicable; |
| • | the date or dates from which such interest will accrue, the interest payment dates on which such interest will be payable or the manner of determination of such interest payment dates and the related record dates, and the basis upon which interest will be calculated; |
| • | if the amount of payments of principal or any premium or interest on the senior debt securities may be determined with reference to an index based on a coin or currency other than that in which such senior debt securities are denominated, or with reference to any currencies, securities or baskets of securities, commodities or indices, the manner in which such amounts shall be determined, to the extent permitted under applicable regulatory capital or other requirements of the FSA or other applicable regulatory authority; |
| • | the manner in which and the place or places where the principal of and any interest on senior debt securities shall be payable; |
| • | the right or requirement, if any, to extend the interest payment periods or defer or cancel the payment of interest and the duration and effect of that extension, deferral or cancellation; |
| • | any other events of default, modifications or elimination of any acceleration rights, or covenants with respect to the senior debt securities of the series, if different from the provisions set forth in this prospectus, and any terms required by or advisable under applicable laws or regulations or rating agency criteria, including laws and regulations relating to attributes required for the senior debt securities to qualify as capital or certain liabilities for regulatory, rating or other purposes; |
| • | any conversion or exchange features of the senior debt securities; |
| • | the circumstances under which we will pay additional amounts on the senior debt securities for any tax, assessment or governmental charge withheld or deducted, if different from the provisions set forth in this prospectus, to the extent permitted under applicable regulatory capital or other requirements of the FSA or other applicable regulatory authority; |
| • | the period or periods within which, the price or prices at which and the terms and conditions upon which senior debt securities may be repurchased, redeemed, repaid or prepaid in whole or in part, at our option, to the extent permitted under applicable regulatory capital or other requirements of the FSA or other applicable regulatory authority; |
| • | the circumstances under which the holders of the senior debt securities may demand repayment of the senior debt securities prior to the stated maturity date and the terms and conditions thereof, to the extent permitted under applicable regulatory capital or other requirements of the FSA or other applicable regulatory authority; |
| • | if other than the principal amount thereof, the portion of the principal amount of senior debt securities which shall be payable upon declaration of acceleration of the maturity thereof or provable in bankruptcy, civil rehabilitation, reorganization, insolvency or similar proceedings; |
| • | the identity of any agents for the senior debt securities, including trustees, depositaries, authenticating, calculating or paying agents, transfer agents or registrars or any clearing organization for any series; |
| • | any restrictions applicable to the offer, sale or delivery of the senior debt securities; |
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| • | any provisions for the discharge of our obligations relating to the senior debt securities, if different from the provisions set forth in this prospectus; |
| • | material U.S. federal or Japanese tax considerations; |
| • | if the senior debt securities are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary senior debt security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of such certificates, documents or conditions; |
| • | if the senior debt securities will be issued in other than book-entry form; |
| • | any listing of the senior debt securities on a securities exchange; |
| • | the terms and conditions under which we will be able to “reopen” a previous issue of a series of senior debt securities and issue additional senior debt securities of that series, if different from the provisions set forth in this prospectus; |
| • | whether the senior debt securities of a series shall be excluded from participation with the senior debt securities of other series or otherwise differentiated from the senior debt securities of other series in relation to any matter in respect of which the senior debt securities generally or senior debt securities of more than one series are contemplated by the Senior Debt Securities Indenture to act together or otherwise be treated or affected collectively; |
| • | any write-down, write-up, bail-in or other provisions applicable to a particular series of senior debt securities required by, relating to or in connection with, applicable regulatory capital or other requirements of the FSA or other applicable regulatory authority; and |
| • | any other specific terms or conditions applicable to a particular series of senior debt securities being offered, which shall not be inconsistent with the provisions of the Senior Debt Securities Indenture. |
The senior debt securities may be issued as original issue discount debt securities. Original issue discount senior debt securities bear no interest or bear interest at below-market rates and may be sold at a discount below their stated principal amount. The applicable prospectus supplement or free writing prospectus will contain information relating to any material income tax, accounting, and other special considerations applicable to such securities.
Principal Amount, Stated Maturity and Maturity
Unless otherwise stated, the principal amount of a senior debt security means the principal amount payable at its stated maturity, unless such amount is not determinable, in which case the principal amount of a senior debt security is its face amount. Any senior debt securities owned by us or any of our affiliates are not deemed to be outstanding for certain purposes.
The term “stated maturity” with respect to any senior debt security means the fixed date on which the principal amount of your senior debt security is scheduled to become due and payable. The principal of your senior debt security may become due and payable sooner, by reason of redemption or acceleration after a default or otherwise in accordance with the terms of your senior debt security. The date on which the principal of your senior debt security actually becomes due and payable, whether at the stated maturity or otherwise, is called the “maturity” of the principal.
We also use the terms “stated maturity” and “maturity” to refer to the dates when other payments become due and payable. For example, we may refer to a regular interest payment date when an installment of interest is scheduled to become due and payable as the “stated maturity” of that installment. When we refer to the “stated maturity” or the “maturity” of a senior debt security without specifying a particular payment, we mean the stated maturity or maturity, as the case may be, of the principal.
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Payment of Additional Amounts
The Japanese government may require us to withhold or deduct amounts from payments on the principal (and premium, if any) or interest on the senior debt securities, as the case may be, for taxes, duties, assessments or governmental charges. If a withholding or deduction of this type is required, we may be required to pay you an additional amount so that the net amounts you receive after such withholding or deduction will be the amount specified in the security to which you are entitled.
Payments will be made without withholding or deduction for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of Japan or any political subdivision or authority thereof or therein having power to tax (the “Japanese taxes”), unless such withholding or deduction is required by law. In that event, we shall pay to the holders such additional amounts as will result in the receipt by or on behalf of the holders or beneficial owners of such amounts as would have been received by them had no such withholding or deduction been required, provided that, no additional amounts will be payable with respect to any senior debt security (a) to, or to a third party on behalf of, a holder or a beneficial owner who is an individual non-resident of Japan or a non-Japanese corporation and is liable for such Japanese taxes in respect of such senior debt security by reason of its (i) having some connection with Japan other than the mere holding of such senior debt security or (ii) being a person having a special relationship with the Company as described in Article 6, paragraph 4 of the Act on Special Measures Concerning Taxation of Japan (Act No. 26 of 1957, as amended) (the “Special Taxation Measures Act”) (a “specially-related person of ours”); or (b) to, or to a third party on behalf of, a holder or a beneficial owner who would otherwise be exempt from any such withholding or deduction but who fails to comply with any applicable requirement to provide interest recipient information (as defined below) or to submit a written application for tax exemption (as defined below) to the paying agent to whom the relevant senior debt security is presented (where presentation is required), or whose interest recipient information is not duly communicated through the participant (as defined below) and the relevant clearing organization to such paying agent; or (c) to, or to a third party on behalf of, a holder or a beneficial owner who is for Japanese tax purposes treated as an individual resident of Japan or a Japanese corporation (except for (A) a designated financial institution (as defined below) which complies with the requirement to provide interest recipient information or to submit a written application for tax exemption and (B) an individual resident of Japan or a Japanese corporation who duly notifies (directly or through the participant or otherwise) the relevant paying agent of its status as not being subject to Japanese taxes to be withheld or deducted by us by reason of such individual resident of Japan or Japanese corporation receiving interest on the relevant senior debt security through a payment handling agent in Japan appointed by it); or (d) where such senior debt security is presented for payment (where presentation is required) more than 30 days after the date on which such payment first becomes due or after the date on which the full amount payable is duly provided for, whichever occurs later, except to the extent that the holder of the senior debt security would have been entitled to such additional amounts on presenting the same for payment on the last day of such 30-day period; or (e) any combination of (a) through (d).
Additional amounts will not be paid with respect to any payment on the senior debt securities to or on behalf of a holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of Japan to be included in the income, for tax purposes, of a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner who, in each case, would not have been entitled to the additional amounts had such beneficiary, settlor, member or beneficial owner been the holder of the senior debt securities. The obligation to pay additional amounts with respect to any taxes, duties, assessments or governmental charges will not apply to (A) any estate, inheritance, gift, sales, transfer, personal property or any similar tax, duty, assessment or governmental charge or (B) any tax, duty, assessment or governmental charge which is payable otherwise than by deduction or withholding from payments of principal of (and premium, if any) or interest on the senior debt securities. References to principal (and premium, if any) and interest in respect of the senior debt securities will be deemed to include any additional amounts due which may be payable in respect of the principal (or premium, if any) or interest.
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If senior debt securities are held through a participant of a clearing organization or a financial intermediary, in each case, as prescribed by the Special Taxation Measures Act, each such participant or financial intermediary being referred to as a “participant,” in order to receive payments free of withholding or deduction by us for, or on account of, Japanese taxes, if the relevant beneficial owner is (A) an individual non-resident of Japan or a non-Japanese corporation (other than a specially-related person of ours) or (B) a Japanese financial institution or financial instruments business operator falling under certain categories prescribed by the cabinet order under Article 6, paragraph 11 of the Special Taxation Measures Act (a “designated financial institution”), such beneficial owner shall, at the time of entrusting a participant with the custody of the relevant senior debt securities, provide certain information prescribed by the Special Taxation Measures Act and the cabinet order and other regulations thereunder to enable the participant to establish that such beneficial owner is exempted from the requirement for Japanese taxes to be withheld or deducted (the “interest recipient information”), and advise the participant if the beneficial owner ceases to be so exempted (including where the beneficial owner who is an individual non-resident of Japan or a non-Japanese corporation becomes a specially-related person of ours).
If senior debt securities are not held by a participant, in order to receive payments free of withholding or deduction by us for, or on account of, Japanese taxes, if the relevant beneficial owner is (A) an individual non-resident of Japan or a non-Japanese corporation (other than a specially-related person of ours) or (B) a designated financial institution, such beneficial owner shall, prior to each time at which it receives interest, submit to the relevant paying agent a “written application for tax exemption” (hikazei tekiyo shinkokusho), in a form obtainable from the paying agent stating, inter alia, the name and address of the beneficial owner, the title of the senior debt securities, the relevant interest payment date, the amount of interest and the fact that the beneficial owner is qualified to submit the written application for tax exemption, together with documentary evidence regarding its identity and residence.
No additional amounts will be payable for or on account of any deduction or withholding imposed pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), the U.S. Treasury regulations thereunder and any other official guidance thereunder (“FATCA”), any intergovernmental agreement entered into with respect to FATCA, or any law, regulation or other official guidance enacted in any jurisdiction implementing, or relating to, FATCA, similar legislation under the laws of any other jurisdiction, or any such intergovernmental agreement.
If there is any withholding or deduction for or on account of Japanese taxes with respect to payments on any senior debt securities, we will use reasonable efforts to obtain certified copies of tax receipts evidencing the payment of such Japanese taxes from the Japanese taxing authority imposing such Japanese taxes, and if certified copies are not available, we will use reasonable efforts to obtain other evidence of payment satisfactory to the Senior Debt Securities Trustee. The Senior Debt Securities Trustee will make such certified copies or other evidence available to the securityholders or the beneficial owners of the senior debt securities upon reasonable request to the Senior Debt Securities Trustee.
We will pay all stamp, court or documentary taxes or any excise or property taxes, charges or similar levies and other duties, if any, which may be imposed by Japan, the United States or any political subdivision or any taxing authority thereof or therein, with respect to the Senior Debt Securities Indenture or any indenture supplemental hereto, or as a consequence of the initial issuance, execution, delivery, registration or enforcement of the senior debt securities.
Governing Law
The Senior Debt Securities Indenture is, and the senior debt securities will be, governed by, and construed in accordance with, New York law.
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Consent to Service of Process and Submission to Jurisdiction
Under the Senior Debt Securities Indenture, we designate Nomura Holding America Inc. (or any successor corporation) as our authorized agent for service of process in any legal action or proceeding arising out of or relating to the Senior Debt Securities Indenture or any senior debt securities brought in any state or Federal court in the Borough of Manhattan, The City of New York, New York, United States of America, and we irrevocably submit to the jurisdiction of those courts.
Currency of Senior Debt Securities
Amounts that become due and payable on your senior debt security in cash will be payable in a currency, composite currency, basket of currencies or currency unit or units specified in your prospectus supplement. We refer to this currency, composite currency, basket of currencies or currency unit or units as a “specified currency.” The specified currency for your senior debt security will be U.S. dollars, unless your prospectus supplement states otherwise. Some senior debt securities may have different specified currencies for principal and interest. You will have to pay for your senior debt securities by delivering the requisite amount of the specified currency for the principal to Nomura Securities International, Inc. or another firm that we name in your prospectus supplement, unless other arrangements have been made between you and us or you and Nomura Securities International, Inc. We will make payments on your senior debt securities in the specified currency.
Book-Entry; Delivery and Form
Each senior debt security in registered form will be represented either by a certificate issued in definitive form to a particular investor or by one or more global securities representing the entire issuance of securities. We refer to those who have senior debt securities registered in their own names, on the books that we or the Senior Debt Securities Trustee or other agent maintain for this purpose, as the “holders” of those senior debt securities. These persons are the legal holders of the senior debt securities. We refer to those who, indirectly through others, own beneficial interests in senior debt securities that are not registered in their own names as indirect owners of those senior debt securities. As we discuss below, indirect owners are not legal holders, and investors in senior debt securities issued in book-entry form or in street name will be indirect owners.
Global Security
We intend to initially issue each senior debt security in book-entry form only. Each senior debt security issued in book-entry form will be represented by one or more global securities that we deposit with and register in the name of one or more financial institutions or clearing systems, or their nominees, which we select. A financial institution or clearing system that we select for any senior debt security for this purpose is called the “depositary” for that senior debt security. A senior debt security will usually have only one depositary but it may have more.
Each series of senior debt securities will have one or more of the following as the depositaries:
| • | DTC; |
| • | a financial institution holding the securities on behalf of Euroclear; |
| • | a financial institution holding the securities on behalf of Clearstream; and |
| • | any other clearing system or financial institution named in the applicable prospectus supplement. |
The depositaries named above may also be participants in one another’s clearing systems. Thus, for example, if DTC is the depositary for a global security, investors may hold beneficial interests in that security through Euroclear or Clearstream, as DTC participants. The depositary or depositaries for your senior debt securities will be named in your prospectus supplement; if none is named, the depositary will be DTC.
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A global security may not be transferred to or registered in the name of anyone other than the depositary or its nominee, unless special termination situations arise. We describe those situations below under “—Holder’s Option to Obtain a Non-Global Security; Special Situations When a Global Security Will Be Terminated.” As a result of these arrangements, the depositary, or its nominee, will be the sole registered owner and holder of all senior debt securities represented by a global security, and investors will be permitted to own only indirect interests in a global security. Indirect interests must be held by means of an account with a broker, bank or other financial institution that in turn has an account with the depositary or with another institution that does. Thus, an investor whose senior debt security is represented by a global security will not be a holder of the senior debt security, but only an indirect owner of an interest in the global security.
If the prospectus supplement for a particular senior debt security indicates that the senior debt security will be issued in global form only, then the senior debt security will be represented by one or more global securities at all times unless and until the global securities are terminated. We describe the situations in which this can occur below under “—Holder’s Option to Obtain a Non-Global Security; Special Situations When a Global Security Will Be Terminated.” If termination occurs, we may issue the senior debt securities through another book-entry clearing system or decide that the senior debt securities may no longer be held through any book-entry clearing system.
Holder’s Option to Obtain a Non-Global Security; Special Situations When a Global Security Will Be Terminated
If we issue any series of senior debt securities in book-entry form but we choose to give the beneficial owners of that series the right to obtain non-global securities, any beneficial owner entitled to obtain non-global securities may do so by following the applicable procedures of the depositary, any transfer agent or registrar for that series and that owner’s bank, broker or other financial institution through which that owner holds its beneficial interest in the senior debt securities. For example, in the case of a global security representing preferred stock or depositary shares, a beneficial owner will be entitled to obtain a non-global security representing its interest by making a written request to the transfer agent or other agent designated by us. If you are entitled to request a non-global certificate and wish to do so, you will need to allow sufficient lead time to enable us or our agent to prepare the requested certificate.
In addition, in a few special situations described below, a global security will be terminated and interests in it will be exchanged for certificates in non-global form representing the senior debt securities it represented. After that exchange, the choice of whether to hold the senior debt securities directly or in street name will be up to the investor. Investors must consult their own banks or brokers to find out how to have their interests in a global security transferred on termination to their own names, so that they will be holders.
The special situations for termination of a global security are as follows:
| • | if the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary for that global security and we do not appoint another institution to act as depositary within 60 days; |
| • | if we notify the Senior Debt Securities Trustee that we wish to terminate that global security; or |
| • | in the case of a global security representing senior debt securities issued under an indenture, if an event of default has occurred with regard to these senior debt securities or warrants and has not been cured or waived. |
If a global security is terminated, only the depositary, and not we or the Senior Debt Securities Trustee, is responsible for deciding the names of the institutions in whose names the senior debt securities represented by the global security will be registered and, therefore, who will be the holders of those senior debt securities.
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Clearance and Settlement
The principal clearing systems we will use are the book-entry systems operated by DTC in the United States, Clearstream in Luxembourg and Euroclear in Belgium. These systems have established electronic securities and payment, transfer, processing, depositary and custodial links among themselves and others, either directly or indirectly through custodians and depositaries. These links allow securities to be issued, held and transferred among the clearing systems without the physical transfer of certificates.
Special procedures to facilitate clearance and settlement have been established among these clearing systems to trade securities across borders in the secondary market. Where payments for senior debt securities we issue in global form will be made in U.S. dollars, these procedures can be used for cross-market transfers and the senior debt securities will be cleared and settled on a delivery against payment basis.
If we issue senior debt securities to you outside of the United States, its territories and possessions, you must initially hold your interests through Euroclear, Clearstream or the clearance system that is described in the applicable prospectus supplement. Cross-market transfers of senior debt securities that are not in global form may be cleared and settled in accordance with other procedures that may be established among the clearing systems for these senior debt securities.
Clearstream and Euroclear hold interests on behalf of their participants through customers’ securities accounts in the names of Clearstream and Euroclear on the books of their respective depositories, which, in the case of securities for which a global security in registered form is deposited with DTC, in turn hold such interests in customers’ securities accounts in the depositories’ names on the books of DTC.
The policies of DTC, Clearstream and Euroclear will govern payments, transfers, exchanges and other matters relating to your interest in senior debt securities held by them. This is also true for any other clearance system that may be named in a prospectus supplement. We have no responsibility for any aspect of the actions of DTC, Clearstream or Euroclear or any of their direct or indirect participants. We have no responsibility for any aspect of the records kept by DTC, Clearstream or Euroclear or any of their direct or indirect participants. We also do not supervise these systems in any way. This is also true for any other clearing system indicated in a prospectus supplement.
DTC, Clearstream, Euroclear and their participants perform these clearance and settlement functions under agreements they have made with one another or with their customers. You should be aware that they are not obligated to perform these procedures and may modify them or discontinue them at any time. The description of the clearing systems in this section reflects our understanding of the rules and procedures of DTC, Clearstream and Euroclear as they are currently in effect. Those systems could change their rules and procedures at any time.
DTC
DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities deposited with it by its participants and facilitates the settlement of transactions among its participants in such securities through electronic computerized book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. DTC’s participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is partially owned by these participants or their representatives. Access to DTC’s book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant of DTC, either directly or indirectly. According to DTC, the foregoing information with respect to DTC has been provided to the financial community for informational purposes only and is not intended to serve as a representation, warranty or contract modification of any kind. The rules applicable to DTC and DTC participants are on file with the SEC.
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If the senior debt securities are issued in the form of registered global securities, such senior debt security will be deposited with DTC on the closing date. This means that we will not issue certificates to each holder. If we issue one global note with respect to each series of senior debt securities to DTC, DTC will keep a computerized record of its participants whose clients have purchased the senior debt securities. The participant will then keep a record of its clients who purchased the senior debt securities. Unless it is exchanged in whole or in part for a certificated senior debt security, a global security may not be transferred; except that DTC, its nominees, and their successors may transfer a global security as a whole to one another.
Beneficial interests in the global securities will be shown on, and transfers of the global securities will be made only through, records maintained by DTC and its participants. We will wire principal and interest payments to DTC’s nominee. We and the Senior Debt Securities Trustee will treat DTC’s nominee as the owner of the global securities for all purposes. Accordingly, we, the Senior Debt Securities Trustee and any paying agent will have no direct responsibility or liability to pay amounts due on the global securities to owners of beneficial interests in the global security.
It is DTC’s current practice, upon receipt of any payment of principal or interest, to credit direct participants’ accounts on the payment date according to their respective holdings of beneficial interest in the global security as shown on DTC’s records. In addition, it is DTC’s current practice to assign any consenting or voting right to direct participants whose accounts are credited with securities on a record date, by using an omnibus proxy. Payments by participants to owners of beneficial interest in the global security, and voting by participants, will be governed by the customary practices between the participants and owners of beneficial interest, as is the case with securities held for the account of customers registered in “street name.” However, payments will be the responsibility of the participants and not of DTC, the Senior Debt Securities Trustee or us.
Clearstream
Clearstream was incorporated as a limited liability company under Luxembourg law. Clearstream holds securities for its customers and facilitates the clearance and settlement of securities transactions between Clearstream customers through electronic book-entry changes in accounts of Clearstream customers, thus eliminating the need for physical movement of certificates. Clearstream provides to its customers, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities, securities lending and borrowing and collateral management. Clearstream interfaces with domestic markets in a number of countries. Clearstream has established an electronic bridge with Euroclear Bank S.A./N.V., the operator of the Euroclear System, to facilitate settlement of trades between Clearstream and Euroclear.
As a registered bank in Luxembourg, Clearstream is subject to regulation by the Luxembourg Commission for the Supervision of the Financial Sector. Clearstream customers are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. In the United States, Clearstream customers are limited to securities brokers and dealers and banks, and may include the underwriters for the senior debt securities offered under any prospectus supplement. Other institutions that maintain a custodial relationship with a Clearstream customer may obtain indirect access to Clearstream. Clearstream is an indirect participant in DTC.
Distributions with respect to the senior debt securities held beneficially through Clearstream will be credited to cash accounts of Clearstream customers in accordance with its rules and procedures, to the extent received by Clearstream.
Euroclear
Euroclear was created in 1968 to hold securities for participants of Euroclear and to clear and settle transactions between Euroclear participants through simultaneous electronic book-entry delivery against payment, thus eliminating the need for physical movement of certificates and risk from lack of simultaneous
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transfers of securities and cash. Transactions may now be settled in many currencies, including United States dollars and Japanese yen. Euroclear provides various other services, including securities lending and borrowing and interfaces with domestic markets in several countries generally similar to the arrangements for cross-market transfers with DTC described below.
Euroclear is operated by Euroclear Bank S.A./N.V. (the “Euroclear Operator”), under contract with Euroclear Clearance System plc, a U.K. corporation (the “Euroclear Clearance System”). The Euroclear Operator conducts all operations, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the Euroclear Clearance System. The Euroclear Clearance System establishes policy for Euroclear on behalf of Euroclear participants. Euroclear participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include the underwriters for the senior debt securities offered under any prospectus supplement. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly. Euroclear is an indirect participant in DTC.
Distributions with respect to the senior debt securities held beneficially through Euroclear will be credited to the cash accounts of Euroclear participants in accordance with the Euroclear terms and conditions, to the extent received by the Euroclear Operator and by Euroclear.
Settlement
You will be required to make your initial payment for the senior debt securities in immediately available funds. Secondary market trading between DTC participants will occur in the ordinary way in accordance with DTC rules and will be settled in immediately available funds using DTC’s Same-Day Funds Settlement System. Secondary market trading between Clearstream participants and/or Euroclear participants will occur in the ordinary way in accordance with the applicable rules and operating procedures of Clearstream and Euroclear and will be settled using the procedures applicable to conventional eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Clearstream participants or Euroclear participants, on the other, will be effected in DTC in accordance with DTC rules on behalf of the relevant European international clearing system by its U.S. depositary; however, such cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in such system in accordance with its rules and procedures and within its established deadlines (based on European time). The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to the U.S. depositary to take action to effect final settlement on its behalf by delivering or receiving senior debt securities in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream participants and Euroclear participants may not deliver instructions directly to their respective U.S. depositaries.
Because of time-zone differences, credits of senior debt securities received in Clearstream or Euroclear as a result of a transaction with a DTC participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. Such credits or any transactions in such securities settled during such processing will be reported to the relevant Clearstream participants or Euroclear participants on such business day. Cash received in Clearstream or Euroclear as a result of sales of senior debt securities by or through a Clearstream customer or a Euroclear participant to a DTC participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream or Euroclear cash account only as of the business day following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of securities among participants of DTC, Clearstream and Euroclear, they are under no obligation to perform or continue to perform such procedures and such procedures may be discontinued at any time. The senior debt securities have been accepted for clearance through DTC, Clearstream and Euroclear.
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Other Clearing Systems
We may choose any other clearing system for a particular series of senior debt securities. The clearance and settlement procedures for the clearing system we choose will be described in the applicable prospectus supplement.
Authentication and Delivery
At any time and from time to time after the execution and delivery of the Senior Debt Securities Indenture, we may deliver senior debt securities of any series to the Senior Debt Securities Trustee for authentication, and the Senior Debt Securities Trustee shall then authenticate and deliver such securities to or upon our written order, signed by an authorized officer of ours, without any further action by us. In authenticating the senior debt securities and accepting the additional responsibilities under the Senior Debt Securities Indenture, the Senior Debt Securities Trustee shall be entitled to receive, and shall be fully protected in relying upon, various documentation from us, including copies of the resolution of our board of directors authorizing the issuance of senior debt securities, any supplemental indenture, officer’s certificates and opinions from legal counsel.
Repurchase
We or any of our subsidiaries may, at any time, subject to prior confirmation of the FSA (if such confirmation is required under the FIEA or any other applicable laws and regulations then in effect), purchase any or all of the senior debt securities in the open market or otherwise at any price in accordance with any applicable law or regulation. Subject to applicable law, neither we nor any of our subsidiaries shall have any obligation to purchase or offer to purchase any senior debt securities held by any holder as a result of our or its purchase or offer to purchase senior debt securities held by any other holder in the open market or otherwise. Any such senior debt securities purchased by us or any of our subsidiaries may, at our discretion or the discretion of the relevant subsidiaries, as the case may be, be held, resold or surrendered to the relevant trustee for cancellation by us or any such subsidiary, as the case may be. The senior debt securities so purchased, while held by or on behalf of us or any such subsidiary, as the case may be, shall not entitle the holder to vote at any meetings of the holders of the relevant series of senior debt securities and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the holders of such series of senior debt securities or for the purposes of “—Default, Remedies and Waiver of Default—Remedies If an Event of Default Occurs” below.
Redemption and Repayment
Unless otherwise indicated in your prospectus supplement, your senior debt security will not be entitled to the benefit of any sinking fund—that is, we will not deposit money on a regular basis into any separate custodial account to repay your senior debt securities. In addition, we will not be entitled to redeem your senior debt security before its stated maturity unless your prospectus supplement specifies a redemption commencement date. You will not be entitled to require us to buy your senior debt security from you, before its stated maturity, unless your prospectus supplement specifies one or more repayment dates.
If your prospectus supplement specifies a redemption commencement date or a repayment date, it will also specify one or more redemption prices or repayment prices, which may be expressed as a percentage of the principal amount of your senior debt security. It may also specify one or more redemption periods during which the redemption prices relating to a redemption of senior debt securities during those periods will apply.
If your prospectus supplement specifies a redemption commencement date, your senior debt security will be redeemable at our option, subject to prior confirmation of the FSA (if such confirmation is required under the FIEA or any other applicable laws and regulations then in effect), at any time on or after that date or at a specified time or times. If we redeem your senior debt security, we will do so at the specified redemption price, together with interest accrued to but excluding the redemption date. If different prices are specified for different redemption periods, the price we pay will be the price that applies to the redemption period during which your senior debt security is redeemed.
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If your prospectus supplement specifies a repayment date, your senior debt security will be repayable at the holder’s option on the specified repayment date at the specified repayment price, together with interest accrued to but excluding the repayment date.
If we exercise an option to redeem any senior debt security, we will give to the holder written notice of the principal amount of the senior debt security to be redeemed, not less than 30 days nor more than 60 days before the applicable redemption date unless otherwise indicated in your prospectus supplement. We will give the notice in the manner described below in “—Notices.”
If a senior debt security represented by a global senior debt security is subject to repayment at the holder’s option, the depositary or its nominee, as the holder, will be the only person that can exercise the right to repayment. Any indirect owners who own beneficial interests in the global senior debt security and wish to exercise a repayment right must give proper and timely instructions to their banks or brokers through which they hold their interests, requesting that they notify the depositary to exercise the repayment right on their behalf.
Different firms have different deadlines for accepting instructions from their customers, and you should take care to act promptly enough to ensure that your request is given effect by the depositary before the applicable deadline for exercise.
Street name and other indirect owners should contact their banks or brokers for information about how to exercise a repayment right in a timely manner.
Optional Tax Redemption
In the event of changes to Japanese withholding tax law after the date of the applicable prospectus supplement, and in other limited circumstances that require us to pay additional amounts, as described in “—Payment of Additional Amounts,” we may, subject to prior confirmation of the FSA (if such confirmation is required under the FIEA or any other applicable laws and regulations then in effect), call all, but not less than all, of the relevant senior debt securities of a series for redemption.
If we call the senior debt securities, we must pay you 100% of their principal amount (except in the case of certain original issue discount securities). We will also pay you accrued but unpaid interest through but not including the date fixed for redemption and any related additional amounts due on the date fixed for redemption. Senior debt securities will stop bearing interest on the redemption date, even if you do not collect your money. We will give notice to the Senior Debt Securities Trustee of any redemption we propose to make at least 45 days, but not more than 60 days, before the redemption date. Notice by the Senior Debt Securities Trustee to participating institutions and by these participants to street name holders of indirect interests in the senior debt securities will be made according to arrangements among them and may be subject to statutory or regulatory requirements.
Prior to giving notice of a tax redemption, we will deliver to the Senior Debt Securities Trustee (i) a certificate signed by a duly authorized officer stating that we are entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to our right to so redeem have occurred, and (ii) an opinion of legal counsel reasonably acceptable to the Senior Debt Securities Trustee to the effect that we are or would be required to pay additional amounts as a result of such change in Japanese law.
Notwithstanding any of the foregoing, we may give such notice in any manner permitted or required by DTC, Euroclear or Clearstream, as applicable.
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Mergers and Similar Transactions
We are generally permitted to consolidate with or merge into another corporation or other entity. We are also permitted to convey, transfer or lease our properties and assets substantially as an entirety to another corporation or other entity. With regard to any series of senior debt securities, however, we may not take any of these actions unless all the following conditions are met:
| • | If the successor entity in the transaction is not Nomura Holdings, Inc., the successor entity must be organized and validly existing as a corporation, partnership or trust and must expressly assume our obligations under the senior debt securities of that series and the Senior Debt Securities Indenture. The successor entity may be organized under the laws of any jurisdiction, whether in Japan, the United States or elsewhere. |
| • | Immediately after giving effect to the transaction, no default under the senior debt securities of that series has occurred and is continuing. For this purpose, “default under the senior debt securities of that series” means an event of default with respect to that series or any event that would be an event of default with respect to that series if the requirements for giving us default notice and for our default having to continue for a specific period of time were disregarded. We describe these matters below under “—Default, Remedies and Waiver of Default.” |
If the conditions described above are satisfied with respect to the senior debt securities of any series, we will not need to obtain the approval of the holders of those senior debt securities in order to merge or consolidate or to convey, transfer or lease our properties and assets. Also, these conditions will apply only if we wish to merge or consolidate with another entity or convey, transfer or lease our properties and assets substantially as an entirety to another entity. We will not need to satisfy these conditions if we enter into other types of transactions, including any transaction in which we acquire the stock or assets of another entity, any transaction that involves a change of control of Nomura Holdings, Inc., or any share-for-share exchange (kabushiki-kokan), share transfer (kabushiki-iten), partial share exchange (kabushiki-kofu) or corporate split (kaisha bunkatsu) pursuant to the Companies Act, but in which we do not merge or consolidate, and any transaction in which we convey, transfer or lease less than substantially all our properties and assets.
Default, Remedies and Waiver of Default
You will have special rights if an event of default with respect to your series of senior debt securities occurs and is continuing, as described in this subsection.
Events of Default
Unless your prospectus supplement says otherwise, when we refer to an event of default with respect to any series of senior debt securities, we mean any of the following:
| • | We do not pay the principal or any premium on any senior debt security of that series on the due date and the non-payment continues for a period of 30 days; |
| • | We do not pay interest on any senior debt security of that series within 30 days after the due date; |
| • | We default in the performance or remain in breach of any covenant we make in the Senior Debt Securities Indenture for the benefit of the relevant series, for 90 days after we receive a notice of default stating that we are in default or breach and requiring us to remedy the default or breach. The notice must be sent by the Senior Debt Securities Trustee or the holders of at least 25% in principal amount of the relevant series of senior debt securities then outstanding; |
| • | We file for bankruptcy or other events of voluntary or involuntary bankruptcy, insolvency or reorganization relating to us occur; or |
| • | If the applicable prospectus supplement states that any additional event of default applies to the series, that event of default occurs. |
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We may change, eliminate, or add to the events of default with respect to any particular series or any particular senior debt security or senior debt securities within a series, as indicated in the applicable prospectus supplement.
Remedies If an Event of Default Occurs
Except as otherwise specified in the applicable prospectus supplement, if an event of default has occurred with respect to any series of senior debt securities and has not been cured or waived, the Senior Debt Securities Trustee or the holders of not less than 25% in principal amount of all senior debt securities of that series then outstanding may accelerate the stated maturity of the affected series of senior debt securities by declaring the entire principal amount of the senior debt securities of that series to be due immediately.
Except as otherwise specified in the applicable prospectus supplement, if the stated maturity of any series is accelerated and a judgment for payment has not yet been obtained, the holders of a majority in principal amount of the senior debt securities of that series may cancel the acceleration, subject to certain conditions set forth in the Senior Debt Securities Indenture.
The Senior Debt Securities Trustee is not required to take any action under the Senior Debt Securities Indenture at the request of any holders unless the holders offer the Senior Debt Securities Trustee reasonable protection from expenses and liability. If the Senior Debt Securities Trustee is provided with an indemnity reasonably satisfactory to it, the holders of a majority in principal amount of all senior debt securities of the relevant series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the Senior Debt Securities Trustee with respect to that series. These majority holders may also direct the Senior Debt Securities Trustee in performing any other action under the Senior Debt Securities Indenture with respect to the senior debt securities of that series.
Before you bypass the Senior Debt Securities Trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights or protect your interests relating to any senior debt security, all of the following must occur:
| • | The holder of our senior debt securities must give the Senior Debt Securities Trustee written notice that an event of default has occurred, and the event of default must not have been cured or waived; |
| • | The holders of not less than 25% in principal amount of all senior debt securities of your series must make a written request that the Senior Debt Securities Trustee take action because of the default, and they or other holders must offer to the Senior Debt Securities Trustee indemnity reasonably satisfactory to the Senior Debt Securities Trustee against the cost and other liabilities of taking that action; |
| • | The Senior Debt Securities Trustee must not have taken action for 60 days after the above steps have been taken; and |
| • | During those 60 days, the holders of a majority in principal amount of the senior debt securities of your series must not have given the Senior Debt Securities Trustee directions that are inconsistent with the above written request of the holders of not less than 25% in principal amount of the senior debt securities of your series. |
You are entitled at any time, however, to bring a lawsuit for the payment of money due on your senior debt security on or after its stated maturity (or, if your senior debt security is redeemable, on or after its redemption date).
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Waiver of Default
The holders of not less than a majority in principal amount of the senior debt securities of any series may waive a default for all senior debt securities of that series. If this happens, the default will be treated as if it has not occurred. No one can waive a payment default on your senior debt security, however, without the approval of the particular holder of that senior debt security.
Compliance with Senior Debt Securities Indenture
We will furnish to the Senior Debt Securities Trustee every year a written statement certifying that to our knowledge we are in compliance with the Senior Debt Securities Indenture and the senior debt securities issued under it, or else specifying any default under the Senior Debt Securities Indenture.
Book-entry and other indirect owners should consult their banks or brokers for information on how to give notice or direction to or make a request of the Senior Debt Securities Trustee and how to declare or cancel an acceleration of the stated maturity of a series of senior debt securities. Book-entry and other indirect owners are described above under “—Book-Entry; Delivery and Form.”
Limitation on Actions for Attachment
Each holder of senior debt securities and the Senior Debt Securities Trustee acknowledge, accept, consent and agree, for a period of 30 days from and including the date upon which the Prime Minister of Japan confirms that specified item 2 measures (tokutei dai nigō sochi), which are the measures set forth in Article 126-2, Paragraph 1, Item 2 of the Deposit Insurance Act (or any successor provision thereto), need to be applied to us, not to initiate any action to attach any of our assets, the attachment of which has been prohibited by designation of the Prime Minister of Japan pursuant to Article 126-16 of the Deposit Insurance Act (or any successor provision thereto).
We shall, as soon as practicable after the Prime Minister of Japan has confirmed that specified item 2 measures (tokutei dai nigō sochi) set forth in Article 126-2, Paragraph 1, Item 2 of the Deposit Insurance Act (or any successor provision thereto) need to be applied to us, deliver a written notice of such event to the holders of senior debt securities and the Senior Debt Securities Trustee through DTC or the relevant clearing organization. Any failure or delay by us to provide such written notice shall not change or delay the effect of the acknowledgement, acceptance, consent and agreement of the holders of senior debt securities or the Senior Debt Securities Trustee described in the preceding paragraph.
Limited Rights to Set Off by Holders of Senior Debt Securities
Subject to applicable law, each holder of senior debt securities, by the acceptance of any interest in the senior debt securities, agrees that, if (a) we shall institute proceedings seeking adjudication of bankruptcy or seeking reorganization under the Bankruptcy Act of Japan (Act No. 75 of 2004, as amended) (the “Bankruptcy Act”), the Civil Rehabilitation Act of Japan (Act No. 225 of 1999, as amended) (the “Civil Rehabilitation Act”), the Corporate Reorganization Act of Japan (Act No. 154 of 2002, as amended) (the “Corporate Reorganization Act”), the Companies Act or any other similar applicable law of Japan, and as long as such proceedings shall have continued, or a decree or order by any court having jurisdiction shall have been issued adjudging us bankrupt or insolvent or approving a petition seeking reorganization under any such laws, and as long as such decree or order shall have continued undischarged or unstayed, or (b) our liabilities exceed, or may exceed, our assets, or we suspend, or may suspend, repayment of our obligations, it will not, and waives its right to, exercise, claim or plead any right of set off, compensation or retention in respect of any amount owed to it by us arising under, or in connection with, the senior debt securities or the Senior Debt Securities Indenture.
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Permitted Transfer of Assets or Liabilities
Notwithstanding certain requirements under the Senior Debt Securities Indenture relating to our ability to merge or consolidate with or merge into, or sell, assign, transfer, lease or convey all or substantially all of our properties or assets to any person or persons, each holder of senior debt securities and the Senior Debt Securities Trustee acknowledge, accept, consent and agree to any transfer of our assets (including shares of our subsidiaries) or liabilities, or any portions thereof, with permission of a Japanese court in accordance with Article 126-13 of the Deposit Insurance Act (or any successor provision thereto), including any such transfer made pursuant to the authority of the Deposit Insurance Corporation of Japan to represent and manage and dispose of our assets under Article 126-5 of the Deposit Insurance Act (or any successor provision thereto), and that any such transfer shall not constitute a sale, assignment, transfer, lease or conveyance of our properties or assets for the purpose of such requirements.
Further Issuances
We reserve the right, from time to time, without the consent of the holders of senior debt securities for any series, to issue additional senior debt securities of such series on terms and conditions identical to those of the senior debt securities of that series, which additional senior debt securities shall increase the aggregate principal amount of, and shall be consolidated and form a single series with, the senior debt securities of that series; provided that such additional senior debt securities must be fungible with the other senior debt securities of the same series for U.S. federal income tax purposes. We may also issue other securities under the Senior Debt Securities Indenture as part of a separate series that have different terms from the senior debt securities.
Modification of the Senior Debt Securities Indenture and Waiver of Covenants
There are four types of changes we can make to the Senior Debt Securities Indenture and the senior debt securities or series of senior debt securities issued under the Senior Debt Securities Indenture.
Changes Requiring Holders’ Approval
First, there are changes that cannot be made without the approval of the holder of each senior debt security affected by the change under the Senior Debt Securities Indenture. Here is a list of those types of changes:
| • | change the stated maturity for any principal or interest payment on a senior debt security; |
| • | reduce the principal amount, the amount payable on acceleration of the stated maturity after a default, the interest rate or the redemption price for a senior debt security; |
| • | permit redemption of a senior debt security if not previously permitted; |
| • | impair any right a holder may have to require repayment of its senior debt security; |
| • | impair any right that a holder of an indexed or any other senior debt security may have to convert the senior debt security for or into securities; |
| • | change the currency of any payment on a senior debt security; |
| • | change the place of payment on a senior debt security; |
| • | impair a holder’s right to sue for payment of any amount due on its senior debt security; |
| • | reduce the percentage in principal amount of the senior debt securities of any one or more affected series, taken separately or together, as applicable, and whether comprising the same or different series or less than all of the senior debt securities of a series, the approval of whose holders is needed to change the Senior Debt Securities Indenture or those senior debt securities; |
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| • | reduce the percentage in principal amount of the senior debt securities of any one or more affected series, taken separately or together, as applicable, and whether comprising the same or different series or less than all of the senior debt securities of a series, the consent of whose holders is needed to waive our compliance with the Senior Debt Securities Indenture or to waive defaults; and |
| • | change the provisions of the Senior Debt Securities Indenture dealing with modification and waiver in any other respect, except to increase any required percentage referred to above or to add to the provisions that cannot be changed or waived without approval of the holder of each affected senior debt security. |
Changes Not Requiring Holders’ Approval
Changes to the Senior Debt Securities Indenture that are limited to clarifications and changes that would not adversely affect any senior debt securities of any series in any material respect do not require the approval of the holders of the affected senior debt securities. Holders’ approval is similarly not necessary to make changes that affect only senior debt securities to be issued under the Senior Debt Securities Indenture after the changes take effect.
We may also make changes or obtain waivers that do not adversely affect a particular senior debt security, even if they affect other senior debt securities. In those cases, we do not need to obtain the approval of the holder of the unaffected senior debt security; we need only obtain any required approvals from the holders of the affected senior debt securities.
Changes Requiring Majority Approval
Any other change to the Senior Debt Securities Indenture and the senior debt securities issued thereunder would require the following approval:
| • | If the change affects only particular senior debt securities within a series, it must be approved by the holders of a majority in principal amount of such particular senior debt securities. |
| • | If the change affects multiple senior debt securities of one or more series, it must be approved by the holders of a majority in principal amount of all senior debt securities affected by the change, with all such affected senior debt securities voting together as one class for this purpose (and by the holders of a majority in principal amount of any affected senior debt securities that by their terms are entitled to vote separately as described below). |
In each case, the required approval must be given by written consent.
The modification of terms with respect to certain senior debt securities of a series issued under the Senior Debt Securities Indenture could be effectuated without obtaining the consent of the holders of a majority in principal amount of other senior debt securities of such series that are not affected by such modification.
The same majority approval would be required for us to obtain a waiver of any of our covenants in the Senior Debt Securities Indenture. Our covenants include the promises we make about merging, which we describe above under “—Mergers and Similar Transactions.” If the holders approve a waiver of a covenant, we will not have to comply with it. The holders, however, cannot approve a waiver of any provision in a particular senior debt security, or in the Senior Debt Securities Indenture as it affects that senior debt security, that we cannot change without the approval of the holder of that senior debt security as described above in “—Changes Requiring Holders’ Approval,” unless that holder approves the waiver.
Book-entry and other indirect owners should consult their banks or brokers for information on how approval may be granted or denied if we seek to change the Senior Debt Securities Indenture or any senior debt securities or request a waiver.
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Special Rules for Action by Holders
When holders take any action under the Senior Debt Securities Indenture, such as giving a notice of default, declaring an acceleration, approving any change or waiver or giving the Senior Debt Securities Trustee an instruction, we will apply the following rules, except as may otherwise be provided in the applicable prospectus supplement.
Only Outstanding Senior Debt Securities Are Eligible
Only holders of outstanding senior debt securities or the outstanding senior debt securities of the applicable series, as applicable, will be eligible to participate in any action by holders of such senior debt securities or the senior debt securities of that series. Also, we will count only outstanding senior debt securities in determining whether the various percentage requirements for taking action have been met. For these purposes, a senior debt security will not be “outstanding” if:
| • | it has been cancelled or surrendered for cancellation; |
| • | we have deposited or set aside, in trust for its holder, money for its payment or redemption; |
| • | it has been issued as a replacement for a mutilated, destroyed, lost or stolen senior debt security; or |
| • | we or one of our affiliates, such as Nomura Securities International, Inc., is the owner. |
In calculating the principal amount of senior debt securities that are to be treated as outstanding, for an original issue discount senior debt security, we will use the principal amount that would be due and payable on the date of the holders’ action if the maturity of the senior debt security were accelerated to that date because of a default.
Determining Record Dates for Action by Holders
We will generally be entitled to set any day as a record date for the purpose of determining the holders that are entitled to take action under the Senior Debt Securities Indenture. In certain limited circumstances, only the Senior Debt Securities Trustee will be entitled to set a record date for action by holders. If we or the Senior Debt Securities Trustee set a record date for an approval or other action to be taken by holders, that vote or action may be taken only by persons or entities who are holders on the record date and must be taken during the period that we specify for this purpose, or that the Senior Debt Securities Trustee specifies if it sets the record date. We or the Senior Debt Securities Trustee, as applicable, may shorten or lengthen this period from time to time. This period, however, may not extend beyond the 180th day after the record date for the action. In addition, record dates for any global senior debt security may be set in accordance with procedures established by the depositary from time to time. Accordingly, record dates for global senior debt securities may differ from those for other senior debt securities.
Form, Exchange and Transfer of Senior Debt Securities
If any senior debt securities cease to be issued in registered global form, they will be issued:
| • | only in fully registered form; |
| • | without interest coupons; and |
| • | unless we indicate otherwise in your prospectus supplement, in denominations of $2,000 and integral multiples of $1,000 in excess thereof. |
Holders may exchange their senior debt securities for senior debt securities of smaller denominations or combined into fewer senior debt securities of larger denominations, as long as the total principal amount is not changed. You may not exchange your senior debt securities for securities of a different series or having different terms, unless your prospectus supplement says you may.
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Holders may exchange or transfer their senior debt securities at the office of the Senior Debt Securities Trustee. They may also replace lost, stolen, destroyed or mutilated senior debt securities at that office. We have appointed the Senior Debt Securities Trustee to act as our agent for registering senior debt securities in the names of holders and transferring and replacing senior debt securities. We may appoint another entity to perform these functions or perform them ourselves.
Holders will not be required to pay a service charge to transfer or exchange their senior debt securities, but they may be required to pay for any tax or other governmental charge associated with the exchange or transfer. The transfer or exchange, and any replacement, will be made only if our transfer agent is satisfied with the holder’s proof of legal ownership. The transfer agent may require an indemnity before replacing any senior debt securities.
If we have designated additional transfer agents for your senior debt security, they will be named in your prospectus supplement. We may appoint additional transfer agents or cancel the appointment of any particular transfer agent. We may also approve a change in the office through which any transfer agent acts.
If the senior debt securities of any series are redeemable and we redeem less than all of those senior debt securities, we may block the transfer or exchange of those senior debt securities during the period beginning 15 calendar days before the day we mail the notice of redemption and ending on the day of that mailing, in order to freeze the list of holders to prepare the mailing. We may also refuse to register transfers of or exchange any senior debt security selected for redemption, except that we will continue to permit transfers and exchanges of the unredeemed portion of any senior debt security being partially redeemed.
If a senior debt security is issued as a global senior debt security, only the depositary, DTC, Euroclear or Clearstream, as applicable, will be entitled to transfer and exchange the senior debt security as described in this subsection, since the depositary will be the sole holder of the senior debt security.
The rules for exchange described above apply to exchange of senior debt securities for other senior debt securities of the same series and kind. If a senior debt security is convertible, exercisable or exchangeable into or for a different kind of security, such as one that we have not issued, or for other property, the rules governing that type of conversion, exercise or exchange will be described in the applicable prospectus supplement.
Paying Agent, Transfer Agent, Registrar and Authenticating Agent
Citibank, N.A., London Branch, Corporate Trust Department, Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, United Kingdom, will initially act as paying agent, transfer agent, registrar and authenticating agent for the senior debt securities. We may change the paying agent, transfer agent, registrar or authenticating agent without prior notice to the holders of the senior debt securities, and we or any of our subsidiaries may act as paying agent, transfer agent, registrar or authenticating agent.
Unclaimed Payments
Regardless of who acts as paying agent, all money paid by us to a paying agent that remains unclaimed at the end of two years after the amount is due to a holder will be repaid to us. After that two-year period, the holder may look only to us for payment and not to the Senior Debt Securities Trustee, any other paying agent or anyone else.
Notices
Notices to be given to holders of a global senior debt security will be given only to the depositary, in accordance with its applicable policies as in effect from time to time. Notices to be given to holders of senior debt securities not in global form will be sent by mail to the respective addresses of the holders as they appear in
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the Senior Debt Securities Trustee’s records, and will be deemed given when mailed. Neither the failure to give any notice to a particular holder, nor any defect in a notice given to a particular holder, will affect the sufficiency of any notice given to another holder.
Book-entry and other indirect owners should consult their banks or brokers for information on how they will receive notices.
Concerning the Senior Debt Securities Trustee
Citibank, N.A., whose offices are located at 388 Greenwich Street, New York, New York 10013, is initially serving as the Senior Debt Securities Trustee for the senior debt securities. Under the Senior Debt Securities Indenture, we are required to file with the Senior Debt Securities Trustee any information, documents and other reports, or summaries thereof, as may be required under the Trust Indenture Act, at the times and in the manner provided under the Trust Indenture Act. However, in case of documents filed with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, any such filing with the Senior Debt Securities Trustee need not be made until the 15th day after such filing is actually made with the SEC.
Indemnification of the Senior Debt Securities Trustee for Actions Taken on Your Behalf
The Senior Debt Securities Indenture provides that we will indemnify the Senior Debt Securities Trustee for, and hold it harmless against, any loss, claim, liability or expense incurred without willful misconduct, negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts under the Senior Debt Securities Indenture, including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties under the Senior Debt Securities Indenture. Subject to these provisions and specified other limitations, the holders of a majority in aggregate principal amount of each series of outstanding senior debt securities of each affected series, voting as one class, may direct the time, method and place of conducting any proceeding for any remedy available to the Senior Debt Securities Trustee, or exercising any trust or power conferred on the Senior Debt Securities Trustee.
Transfer and Exchange
A holder of the senior debt securities issued in definitive form may transfer or exchange senior debt securities in accordance with the Senior Debt Securities Indenture. The registrar and the Senior Debt Securities Trustee may require a holder of senior debt securities, among other things, to furnish appropriate endorsements and transfer documents, and to pay any taxes and fees required by law or permitted by the Senior Debt Securities Indenture.
We will treat the registered holder of senior debt securities as the owner of that senior debt security for all purposes. See “—Book-Entry, Delivery and Form” above.
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DESCRIPTION OF PERPETUAL SUBORDINATED DEBT SECURITIES
The following is a summary of certain general terms and provisions of the perpetual subordinated debt securities that we may offer under this prospectus. The specific terms and provisions of a particular series of perpetual subordinated debt securities to be offered, and the extent, if any, to which the general terms and provisions summarized below apply to such perpetual subordinated debt securities, will be described in an applicable prospectus supplement or free writing prospectus that we authorize to be delivered in connection with such offering. If there is any inconsistency between the general terms and provisions presented here and those in the applicable prospectus supplement or free writing prospectus, those in the applicable prospectus supplement or free writing prospectus will apply.
Because this section is a summary, it does not describe every aspect of the perpetual subordinated debt securities. It is qualified in its entirety by the provisions of the perpetual subordinated indenture (as described below), the form of which has been filed as an exhibit to the registration statement of which this prospectus forms a part, and the perpetual subordinated debt securities, forms of which will be filed as exhibits to a current report on Form 6-K in connection with an offering of the relevant series of perpetual subordinated debt securities. You should refer to those documents for additional information.
General
We may issue perpetual subordinated debt securities from time to time, in one or more series under a perpetual subordinated indenture between us and Citibank, N.A., as trustee, to be entered into in connection with the first issuance of such perpetual subordinated debt securities, as amended or supplemented from time to time. The perpetual subordinated indenture is referred to (as amended or supplemented from time to time) in this prospectus as the Perpetual Subordinated Debt Securities Indenture, and the trustee is referred to in this prospectus as the “Perpetual Subordinated Debt Securities Trustee.” The Perpetual Subordinated Debt Securities Indenture is qualified under the Trust Indenture Act. The form of the Perpetual Subordinated Debt Securities Indenture is included as an exhibit to the registration statement of which this prospectus forms a part. Any supplemental indentures to the Perpetual Subordinated Debt Securities Indenture will be submitted to the SEC on a Form 6-K or by a post-effective amendment to the registration statement of which this prospectus is a part.
The Perpetual Subordinated Debt Securities Indenture provides that we may issue perpetual subordinated debt securities up to an aggregate principal amount as we may authorize from time to time. The Perpetual Subordinated Debt Securities Indenture and the perpetual subordinated debt securities do not limit our ability to incur other indebtedness or to issue other securities. Also, we are not subject to financial or similar restrictions by the terms of the perpetual subordinated debt securities.
The perpetual subordinated debt securities will be our direct and unsecured obligations that are conditional and subordinated, as described under “—Subordination” and rank pari passu and without preference among themselves. As described under “—Subordination,” upon the occurrence of a Liquidation Event (as defined below), the perpetual subordinated debt securities (i) will be subordinated to all of the existing and future Senior Indebtedness (as defined below) (which includes our dated subordinated debt), (ii) will rank pari passu with all of the existing and future Liquidation Parity Liabilities (as defined below) and (iii) rank senior to all of the existing and future Liquidation Junior Liabilities (as defined below).
Notwithstanding such ranking of the perpetual subordinated debt securities, because the perpetual subordinated debt securities are subject to the Going Concern Write-Down (as defined below) and the Write-Down and Cancellation (as defined below) provisions described under “—Write-Downs and Write-Ups,” the perpetual subordinated debt securities may effectively recover less than any liabilities or shares that are not subject to similar write-down provisions.
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The perpetual subordinated debt securities are intended to qualify as our Additional Tier 1 Capital (as defined below). As required under the Applicable Capital Adequacy Regulations (as defined below) to so qualify, the perpetual subordinated debt securities are our perpetual obligations in respect of which there is no fixed maturity or redemption date. To the extent the perpetual subordinated debt securities have not been subject to a Write-Down and Cancellation, as described under “—Write-Downs and Write-Ups,” a series of perpetual subordinated debt securities may be redeemed in the circumstances described under “—Repurchases and Optional Redemption—Optional Redemption,” “—Repurchases and Optional Redemption—Optional Tax Redemption” or “—Repurchases and Optional Redemption—Optional Regulatory Redemption.”
Further, the perpetual subordinated debt securities will be subject to a full or partial write-down upon the occurrence of certain events. See “—Write-Downs and Write-Ups.” In addition, under the terms of the perpetual subordinated debt securities, we are permitted in our sole discretion to, and in certain circumstances will be required to, cancel payments of interest on the perpetual subordinated debt securities. See “—Cancellation of Interest Payments.” By subscribing for, purchasing or otherwise acquiring the perpetual subordinated debt securities, holders of the perpetual subordinated debt securities consent to such write-down and cancellation of payments of interests, and consent and agree that such events will not constitute a default in payment, an event of default or an event of acceleration. As a result of any write-down or cancellation of interest payments pursuant to the terms of the perpetual subordinated debt securities, you may lose all or part of your investment in the perpetual subordinated debt securities or receive reduced or no interest payments. Moreover, as a consequence of a Going Concern Write-Down, a Write-Down and Cancellation or cancellation of payments of interest, as a holder of the perpetual subordinated debt securities, you may also recover less ratably than the holders of liabilities or shares that otherwise rank, or are expressed to rank, pari passu with or junior to the perpetual subordinated debt securities especially if such securities do not contain similar write-down or interest cancellation provisions, or may not recover at all. You should carefully consider these features and their potential effects before making an investment decision in the perpetual subordinated debt securities, and read the risk factors appearing or incorporated by reference in this prospectus and the relevant prospectus supplement, including those under the heading “Risk Factors—Risks Relating to the Perpetual Subordinated Debt Securities” in this prospectus.
The perpetual subordinated debt securities will not be entitled to the benefit of any sinking fund—that is, we will not deposit money on a regular basis into any separate custodial account to repay your perpetual subordinated debt securities.
Terms Specified in the Applicable Prospectus Supplement or Free Writing Prospectus
The applicable prospectus supplement or free writing prospectus will specify, if applicable, the following terms of and other information relating to a particular series of perpetual subordinated debt securities being offered. Such information may include:
| • | the issue date of the perpetual subordinated debt securities; |
| • | the title and type of the perpetual subordinated debt securities of the series (which shall distinguish the perpetual subordinated debt securities of the series from all other perpetual subordinated debt securities); |
| • | the ranking of the perpetual subordinated debt securities, including the subordination terms for the perpetual subordinated debt securities, if different from the provisions set forth in this prospectus; |
| • | the initial aggregate principal amount of the perpetual subordinated debt securities and any limits on the total aggregate principal amount of such perpetual subordinated debt securities; |
| • | the issue price at which we originally issue the perpetual subordinated debt securities, expressed as a percentage of the principal amount, and the original issue date; |
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| • | the denominations in which the perpetual subordinated debt securities shall be issuable; |
| • | the coin or currency in which the perpetual subordinated debt securities are denominated or in which principal, premium, if any, and interest, if any, is payable; |
| • | the date or dates on which the principal and premium of the perpetual subordinated debt securities, if any and to the extent applicable, is payable; |
| • | the rate or rates (which may be fixed or variable) at which the perpetual subordinated debt securities will bear interest, and the manner of calculating such rate or rates, if applicable; |
| • | the date or dates from which such interest, if any and to the extent applicable, will accrue, the interest payment dates on which such interest will be payable or the manner of determination of such interest payment dates and the related record dates; |
| • | if the amount of payments of principal or any premium or interest on the perpetual subordinated debt securities may be determined with reference to an index based on a coin or currency other than that in which such perpetual subordinated debt securities are denominated, or with reference to any currencies, securities or baskets of securities, commodities or indices, the manner in which such amounts shall be determined, to the extent permitted under applicable regulatory capital or other requirements of the FSA, or other applicable regulatory authority; |
| • | the manner in which and the place or places where, if applicable, the principal of, premium of and any interest on perpetual subordinated debt securities shall be payable; |
| • | the right or requirement to extend the interest payment periods or cancel the payment of interest and the duration and effect of that extension or cancellation, if different from the provisions set forth in this prospectus; |
| • | any terms required by or advisable under applicable laws or regulations or rating agency criteria, including laws and regulations relating to attributes required for the perpetual subordinated debt securities to qualify as capital or certain liabilities for regulatory, rating or other purposes; |
| • | if applicable, any modification or elimination of any covenants or events or conditions that would constitute breaches with respect to a series of perpetual subordinated debt securities, if different from the provisions applicable to such perpetual subordinated debt securities set forth in this prospectus; |
| • | any conversion or exchange features of the perpetual subordinated debt securities; |
| • | the circumstances under which we will pay additional amounts (as described below) on the perpetual subordinated debt securities for any tax, assessment or governmental charge withheld or deducted, if different from the provisions set forth in this prospectus, to the extent permitted under applicable regulatory capital or other requirements of the FSA, or other applicable regulatory authority; |
| • | the period or periods within which, the price or prices at which and the terms and conditions upon which perpetual subordinated debt securities may be repurchased, redeemed, repaid or prepaid in whole or in part, at our option, to the extent permitted under applicable regulatory capital or other requirements of the FSA, or other applicable regulatory authority; |
| • | the identity of any agents for the perpetual subordinated debt securities, including trustees, depositaries, authenticating, calculating or paying agents, transfer agents or registrars or any clearing organization for any series; |
| • | any restrictions applicable to the offer, sale or delivery of the perpetual subordinated debt securities; |
| • | any provisions for the discharge of our obligations relating to the perpetual subordinated debt securities, if different from the provisions set forth in this prospectus; |
| • | material U.S. federal or Japanese tax considerations, to the extent not set out or different from the descriptions included in this prospectus; |
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| • | if the perpetual subordinated debt securities are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary perpetual subordinated debt security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of such certificates, documents or conditions; |
| • | if the perpetual subordinated debt securities will be issued in other than book-entry form; |
| • | any listing of the perpetual subordinated debt securities on a securities exchange; |
| • | the terms and conditions under which we will be able to “reopen” a previous issue of a series of perpetual subordinated debt securities and issue additional perpetual subordinated debt securities of that series, if different from the provisions set forth in this prospectus; |
| • | whether the perpetual subordinated debt securities of a series shall be excluded from participation with the perpetual subordinated debt securities of other series or otherwise differentiated from the perpetual subordinated debt securities of other series in relation to any matter in respect of which the perpetual subordinated debt securities generally or perpetual subordinated debt securities of more than one series are contemplated by the Perpetual Subordinated Debt Securities Indenture to act together or otherwise be treated or affected collectively; |
| • | any write-down, write-up, bail-in or other provisions applicable to a particular series of perpetual subordinated debt securities required by, relating to or in connection with, applicable regulatory capital or other requirements of the FSA, or other applicable regulatory authority, if different from the provisions set forth in this prospectus; and |
| • | any other specific terms or conditions applicable to a particular series of perpetual subordinated debt securities being offered, which shall not be inconsistent with the provisions of the Perpetual Subordinated Debt Securities Indenture. |
Subordination
The rights of the holders of the perpetual subordinated debt securities will be subordinated in right of payment to all Senior Indebtedness upon the occurrence of a Liquidation Event. If a Liquidation Event has occurred, and so long as any such Liquidation Event shall continue, each holder of the perpetual subordinated debt securities will only have a Liquidation Claim (as defined below). For so long as such Liquidation Event continues, no payments in respect of a Liquidation Claim shall be made unless and until the Condition for Liquidation Payment (as defined below) shall have been met. Payments made in respect of a Liquidation Claim shall not exceed the applicable Liquidation Distributable Amount (as defined below). Notwithstanding the ranking of the perpetual subordinated debt securities as described herein, at any time prior to the payment of Liquidation Claims in accordance with the subordination provisions of the perpetual subordinated debt securities, Liquidation Claims shall be subject to a Going Concern Write-Down or a Write-Down and Cancellation upon the occurrence of a Capital Ratio Event (as defined below), a Non-Viability Event (as defined below) or a Bankruptcy Event (as defined below), as the case may be. In particular, if a Non-Viability Event or a Bankruptcy Event occurs, we expect that a Write-Down and Cancellation would take place before the treatment of our remaining indebtedness or other securities without similar write-down features is determined.
“Senior Indebtedness” means all liabilities (including our liabilities under dated subordinated debt) other than (i) our liabilities under the perpetual subordinated debt securities (except for liabilities which have become due and payable on or before the date of the occurrence of a Liquidation Event and remain unpaid), (ii) Liquidation Parity Liabilities and (iii) Liquidation Junior Liabilities.
“Liquidation Event” means the commencement of a liquidation proceeding (seisan) (excluding a special liquidation proceeding (tokubetsu seisan) under the Companies Act) by or with respect to us under the Companies Act.
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“Liquidation Parity Liabilities” mean our liabilities that rank, or are expressed to rank, effectively pari passu as to liquidation distributions with our liabilities under the perpetual subordinated debt securities but excluding such liabilities that have become due and payable on or before the date of the occurrence of a Liquidation Event and remain unpaid.
“Liquidation Junior Liabilities” mean our liabilities that rank, or are expressed to rank, effectively subordinate in priority of payment as to liquidation distributions to our liabilities under the perpetual subordinated debt securities but excluding such liabilities that have become due and payable on or before the date of the occurrence of a Liquidation Event and remain unpaid.
“Liquidation Claim” means the claim of each holder of the perpetual subordinated debt securities then outstanding in a liquidation proceeding (seisan) (excluding a special liquidation proceeding (tokubetsu seisan)) with respect to us, in an amount equal to the Current Principal Amount (as defined below) of the perpetual subordinated debt securities held by such holder on the date on which such claim becomes due and payable pursuant to the subordination provisions as described herein, plus any accrued and unpaid interest thereon to, but excluding, the date on which the Liquidation Event occurs (unless cancelled in accordance with the terms set forth in “—Cancellation of Interest Payments”) and any additional amounts pursuant to “—Payment of Additional Amounts” excluding any amounts that have become due and payable on or before the date of the occurrence of a Liquidation Event and remain unpaid.
“Condition for Liquidation Payment” means, upon the occurrence and continuation of a Liquidation Event, all Senior Indebtedness held by our creditors entitled to payment or satisfaction prior to commencement of distribution of residual assets to our shareholders is paid in full or otherwise satisfied in full in the liquidation proceeding (seisan) pursuant to the Companies Act.
“Liquidation Distributable Amount” means the amount of liquidation distributions that would have been paid from our assets in respect of a Liquidation Claim, assuming that (i) all Liquidation Claims and all Liquidation Parity Liabilities had been Senior Liquidation Preferred Shares (as defined below), and (ii) all Liquidation Junior Liabilities had been our preferred shares other than the Senior Liquidation Preferred Shares.
For the purposes of the calculation of the Liquidation Distributable Amount, the amount of Liquidation Claims and the amount of principal amount, accrued and unpaid interest and additional amounts in respect of any Liquidation Parity Liabilities and Liquidation Junior Liabilities that are not denominated in Japanese yen shall be calculated in Japanese yen, and the Liquidation Distributable Amount payable in respect of a Liquidation Claim upon the satisfaction of the Condition for Liquidation Payment (if any) shall be initially calculated in Japanese yen and converted into U.S. dollars, each in a manner that we deem appropriate pursuant to applicable Japanese law.
“Senior Liquidation Preferred Shares” means our preferred shares ranked at the relevant time most senior in priority of payment as to liquidation distributions.
The relative rankings and payment of the Liquidation Claims and other claims against us in any liquidation proceeding (seisan) in respect of us are in all events subject to the provisions of the Companies Act, which prohibit distribution of residual assets to our shareholders prior to payment or satisfaction of all of our then outstanding debts, including the Liquidation Claims to the extent not written down or cancelled pursuant to the going concern, non-viability and bankruptcy write-down provisions, the interest cancellation provisions, and subject to the subordination provisions, each described herein.
Notwithstanding the perpetual subordinated debt securities being stated to rank ahead of our certain preferred stock and common stock as described above, the perpetual subordinated debt securities are subject to a Going Concern Write-Down and a Write-Down and Cancellation, as described under “—Write-Downs and Write-Ups.”
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We shall make no amendment or modification to the subordination provisions contained in the Perpetual Subordinated Debt Securities Indenture that is prejudicial to any present or future creditor in respect of any Senior Indebtedness. No such amendment or modification shall in any event be effective against any such creditor.
Each holder of perpetual subordinated debt securities, by its subscribing for, purchasing or otherwise acquiring such securities, shall thereby agree that if any payment of principal or interest in respect of the perpetual subordinated debt securities is made to such holder after the occurrence of a Liquidation Event and the amount of such payment exceeds the amount, if any, that should have been paid to such holder upon the proper application of the subordination provisions of such perpetual subordinated debt securities, the payment of such excess amount shall be deemed null and void, and such holder or the Perpetual Subordinated Debt Securities Trustee or paying agent (to the extent it has not paid such amount to any holder) (as the case may be) shall be obliged to return the amount of the excess payment within ten days after receiving notice of the excess payment, and shall also thereby agree that, upon the occurrence of a Liquidation Event and for so long as such Liquidation Event shall continue, our liabilities to such holder which would otherwise become so payable on or after the date on which such Liquidation Event occurs shall not be set off against any liabilities of such holder owed to us unless, until and only in such amount as our liabilities under the perpetual subordinated debt securities become payable pursuant to the proper application of the subordination provisions of such perpetual subordinated debt securities.
Interest
Notwithstanding anything to the contrary contained in the terms of the perpetual subordinated debt securities, any interest payments under the perpetual subordinated debt securities shall be subject to the going concern, non-viability and bankruptcy write-down provisions, the write-up provisions, the interest cancellation provisions, and the subordination provisions, each described herein.
Floating Rate Interest
Any series of perpetual subordinated debt securities bearing interest at a floating rate that may be issued will bear interest at the relevant floating interest rate as described in the applicable prospectus supplement or free writing prospectus with respect to the relevant series of floating rate perpetual subordinated debt securities.
Fixed Rate Interest
Any series of perpetual subordinated debt securities bearing interest at a fixed rate that may be issued will bear interest at the relevant fixed interest rate as described in the applicable prospectus supplement or free writing prospectus with respect to the relevant series of fixed rate perpetual subordinated debt securities.
Cessation of Accrual of Interest
Notwithstanding anything to the contrary contained in the terms of the perpetual subordinated debt securities, no interest shall accrue on the perpetual subordinated debt securities (i) during the period when the Current Principal Amount of the perpetual subordinated debt securities is one cent per $1,000 in Original Principal Amount (as defined below), (ii) after the date fixed for redemption, or (iii) during any period where a Liquidation Event occurs and continues.
“Current Principal Amount” means at any time:
| (i) | with respect to the perpetual subordinated debt securities outstanding, the then outstanding principal amount of such perpetual subordinated debt securities, being the Original Principal Amount of such perpetual subordinated debt securities at issuance, as such amount may be reduced on one or more |
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| occasions pursuant to a Going Concern Write-Down and/or reinstated on one or more occasions following a Write-Up, as the case may be, in accordance with the terms of the perpetual subordinated debt securities and the Perpetual Subordinated Debt Securities Indenture; or |
| (ii) | with respect to any other liabilities or obligations, the then outstanding principal amount of such liability or obligation, as calculated in accordance with its terms and conditions, including the application of write-down or write-up provisions, if any. |
The term “principal” of the perpetual subordinated debt securities means, as the context requires, the Current Principal Amount of the perpetual subordinated debt securities at any relevant time and, where such term is used in relation to any payment, the principal if, when and to the extent due and payable under the Perpetual Subordinated Debt Securities Indenture and the perpetual subordinated debt securities of any applicable series.
“Original Principal Amount” means, with respect to the perpetual subordinated debt securities and any other liabilities or obligations, the principal amount of such perpetual subordinated debt securities or other liability or obligation on the date such perpetual subordinated debt securities or other liability or obligation was issued or created.
Cancellation of Interest Payments
Optional Cancellation of Interest Payments
If we determine that it is necessary to cancel payment of the interest on the perpetual subordinated debt securities at any time and in our sole discretion, we may cancel payment of all or part of the interest accrued on the perpetual subordinated debt securities on an interest payment date. We may cancel any payment of all or part of interest pursuant to the foregoing, even if no cancellation of interest is required or the amount so cancelled exceeds the amount we are required to cancel due to the Interest Payable Amount Limitation, as described under “—Mandatory Cancellation of Interest Payments due to Interest Payable Amount Limitation.”
If we determine not to make an interest payment (or if we determine to make a payment of a portion, but not all, of such interest payment) on any interest payment date, such non-payment will be deemed to be an effective cancellation of such interest payment (or the portion of such interest payment not paid) without any further action being taken or any other condition being satisfied. Interest that is deemed cancelled will not be due and shall not accumulate or be payable at any time thereafter.
If we determine to cancel an interest payment on the perpetual subordinated debt securities (in whole or in part) in our sole discretion (and not pursuant to applicable laws or orders or administrative actions of the FSA or any other relevant Japanese supervisory authority, including an order of the FSA to submit and carry out a capital distribution constraints plan, as described under “—Cancellation of Interest Payments under the Japanese Capital Distribution Constraints System”) on an interest payment date under the terms set forth in “—Optional Cancellation of Interest Payments,” (i) until such time we have determined to make an interest payment or cancel an interest payment (in whole or in part) on the perpetual subordinated debt securities that shall become due and payable on the immediately following interest payment date or if earlier, such time that all of the perpetual subordinated debt securities have been redeemed or repurchased and cancelled in accordance with the terms set forth in “—Repurchases and Optional Redemption,” we shall procure that our board of directors shall not resolve, or present our own proposal at a general meeting of shareholders, to (x) make a payment of a cash dividend on shares of our common stock or other classes of our shares qualifying as our Additional Tier 1 Capital (excluding Additional Tier 1 Senior Dividend Preferred Shares (as defined below)) or (y) make a payment of a cash dividend on the Additional Tier 1 Senior Dividend Preferred Shares in excess of the product of one-half of the amount of the preferred cash dividend on such Additional Tier 1 Senior Dividend Preferred Shares and a ratio, the numerator of which is the portion of the amount of interest determined by us to be paid on the perpetual subordinated debt securities on such interest payment date, and the denominator of which is the full amount of
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interest which should have been paid on the perpetual subordinated debt securities on such interest payment date (for the purposes of the calculation of the full amount of interest which should have been paid on the perpetual subordinated debt securities, the amount of interest shall be calculated without application of the mandatory interest cancellation provisions, as described under “—Mandatory Cancellation of Interest Payments due to Interest Payable Amount Limitation,” even in the case where such provisions are applied) to our shareholders, and (ii) we shall procure that the proportion of the amount that we cancel in respect of interest or dividends on or in respect of any Additional Tier 1 Liabilities (as defined below) that are due and payable on the same date as such interest payment date to the full amount of such interest or dividends which should have been paid before cancellation on such date be at least equal to the proportion of the amount that we cancel in respect of the interest on the perpetual subordinated debt securities on such interest payment date to the full amount of such interest on the perpetual subordinated debt securities which should have been paid before cancellation on such interest payment date.
For the purposes of the determination of the proportion of the cancellation of interest or dividends on any Additional Tier 1 Liabilities, interest or dividends on or in respect of any Additional Tier 1 Liabilities shall be deemed to be due and payable on the same date as the applicable interest payment date in relation to the perpetual subordinated debt securities, notwithstanding the effect of any adjustments resulting from the business day conventions applicable to the perpetual subordinated debt securities and those applicable to such Additional Tier 1 Liabilities.
“Additional Tier 1 Senior Dividend Preferred Shares” means our preferred shares ranked at the relevant time most senior in priority of payment as to dividends and qualifying as our Additional Tier 1 Capital under the Applicable Capital Adequacy Regulations.
“Additional Tier 1 Liabilities” means at any time instruments qualifying as our Additional Tier 1 Capital (other than the perpetual subordinated debt securities) that are issued directly by us and are treated as liabilities under the Applicable Capital Adequacy Regulations (excluding any instruments issued or created by any consolidated subsidiary of us incorporated solely for the purposes of raising our regulatory capital (a “Special Purpose Company”) and qualifying as our Additional Tier 1 Capital).
“Additional Tier 1 Capital” means any and all items constituting Additional Tier 1 Capital (for the avoidance of doubt, excluding then applicable regulatory adjustments) under the Applicable Capital Adequacy Regulations and shall also include any successor or substitute term applicable pursuant to the Applicable Capital Adequacy Regulations.
“Applicable Capital Adequacy Regulations” means the FIEA, and any orders, rules, regulations, ordinances, regulatory notices, guidelines and policies thereunder applicable at any time as the context may require under the Perpetual Subordinated Debt Securities Indenture, including, without limitation, the FSA’s “Establishment of standards on sufficiency of capital stock of a final designated parent company and its subsidiary entities, etc. compared to the assets held thereby” (2010 FSA Regulatory Notice No. 130, as amended) prescribing the capital adequacy regulations on a consolidated basis applicable to final designated parent companies (saishu shitei oyagaisha), including us.
Cancellation of Interest Payments under the Japanese Capital Distribution Constraints System
We will make a determination to cancel interest payments if and to the extent we fail to meet the applicable regulatory capital buffer requirements under the Applicable Capital Adequacy Regulations and are so ordered by the FSA under the Japanese capital distribution constraints system. Under this system, if we fail to meet the applicable regulatory capital buffer requirements under the Applicable Capital Adequacy Regulations, the FSA has the authority to order us to submit to it and implement a capital distribution constraints plan. A capital distribution constraints plan must be reasonably designed to restore the required regulatory capital buffers by restricting capital distributions, such as dividends on shares, dividends and interest on instruments qualifying as
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Additional Tier 1 Capital, share buybacks, repurchase and redemption of instruments qualifying as Additional Tier 1 Capital, and bonus payments, up to a certain amount depending on the level of the deficit in our regulatory capital buffers. As a consequence, in the event that our consolidated common equity tier 1 capital is insufficient to meet the regulatory capital buffer requirements applicable to us, based on a capital distribution constraints plan submitted to the FSA, we will make a determination to cancel interest payments, in whole or in part, in respect of the perpetual subordinated debt securities under the terms set forth in this section captioned “—Optional Cancellation of Interest Payments.”
Mandatory Cancellation of Interest Payments due to Interest Payable Amount Limitation
In addition to our ability to cancel interest payments in our sole discretion, as described in “—Optional Cancellation of Interest Payments,” interest payments on the perpetual subordinated debt securities will be subject to a limitation based on the Interest Payable Amount (as defined below) (such limitation being referred to as the “Interest Payable Amount Limitation”) and, as a result, we will be prohibited from paying, and shall cancel, all or part of the interest on the perpetual subordinated debt securities on an interest payment date (including additional amounts with respect thereto, if any), if, and to the extent that, the interest payable on the perpetual subordinated debt securities on such interest payment date (including additional amounts with respect thereto, if any) exceeds the Interest Payable Amount.
“Interest Payable Amount” means, in respect of any interest payment date, the product of the Adjusted Distributable Amounts (as defined below) on such interest payment date and a ratio, the numerator of which is the amount of interest (including additional amounts with respect thereto, if any) that should have been paid on the perpetual subordinated debt securities on such interest payment date, and the denominator of which is the aggregate amount of interest (including additional amounts with respect thereto, if any) that should have been paid on the perpetual subordinated debt securities on such interest payment date and dividends or interest (including any amounts with respect thereto substantially similar to additional amounts, if any) that should have been paid in respect of any Senior Dividend Preferred Shares (as defined below) and any Parity Securities (as defined below) on the same date as such interest payment date (rounding any amount less than a whole cent down to the nearest whole cent).
“Senior Dividend Preferred Shares” means our preferred shares ranked at the relevant time most senior in priority of payment as to dividends.
“Parity Securities” means our liabilities that are subject to substantially the same terms in respect of rights of interest payments as the terms of the perpetual subordinated debt securities described under “—Optional Cancellation of Interest Payments” and “—Mandatory Cancellation of Interest Payments due to Interest Payable Amount Limitation,” (excluding the perpetual subordinated debt securities and any liabilities owed to any Special Purpose Company), and any instruments qualifying as our regulatory capital issued by any Special Purpose Company that is subject to substantially the same terms in respect of rights of dividends or interest payments as the terms of the perpetual subordinated debt securities described under “—Optional Cancellation of Interest Payments” and “—Mandatory Cancellation of Interest Payments due to Interest Payable Amount Limitation.”
“Adjusted Distributable Amounts” means, in respect of any date, the distributable amounts (bunpai kano gaku) of ours on such date as calculated in accordance with the Companies Act, after deducting the sum of any dividend or interest (including additional amounts with respect thereto, or any amounts with respect thereto substantially similar to additional amounts, as applicable, if any) that has been paid in respect of the perpetual subordinated debt securities, any Parity Securities and any Junior Securities (as defined below) from the beginning of our fiscal year in which such date falls until the date immediately preceding such date.
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“Junior Securities” means our liabilities ranking in right of interest payments effectively junior to the perpetual subordinated debt securities in respect of either of the terms as described under “—Optional Cancellation of Interest Payments” or “—Mandatory Cancellation of Interest Payments due to Interest Payable Amount Limitation,” (excluding any liabilities owed to any Special Purpose Company), and any instruments qualifying as our regulatory capital issued by any Special Purpose Company ranking in right of dividend or interest payments effectively junior to the perpetual subordinated debt securities in respect of either of the terms as described under “—Optional Cancellation of Interest Payments” or “—Mandatory Cancellation of Interest Payments due to Interest Payable Amount Limitation.”
For the purposes of the calculation of the Interest Payable Amounts or the Adjusted Distributable Amounts, any dividend or interest (including additional amounts with respect thereto, or any amounts with respect thereto substantially similar to additional amounts, as applicable, if any) shall be deemed to be paid in respect of the perpetual subordinated debt securities, any Senior Dividend Preferred Shares, any Parity Securities and any Junior Securities on the date without any adjustments resulting from the methods of determining the business days in relation to the perpetual subordinated debt securities and the business days in relation to any Senior Dividend Preferred Shares, Parity Securities and Junior Securities.
For the purposes of the calculation of the Interest Payable Amounts or the Adjusted Distributable Amounts, the amounts of interest or dividends (including additional amounts with respect thereto, or any amounts with respect thereto substantially similar to additional amounts, as applicable, if any) in respect of the perpetual subordinated debt securities, any Senior Dividend Preferred Shares, Parity Securities and Junior Securities that are not denominated in Japanese yen shall be calculated in Japanese yen, and the Interest Payable Amounts and the amount of interest (including additional amounts with respect thereto, if any) on the perpetual subordinated debt securities that is required to be cancelled on such interest payment date shall be initially calculated in Japanese yen and converted into U.S. dollars, each in a manner that we deem appropriate.
Effect of Cancellation of Interest Payment
Interest payments are non-cumulative, and any interest amount (including additional amounts with respect thereto, if any), the payment of which is cancelled (in whole or in part) either in our discretion or because such cancellation is mandatory due to the Interest Payable Amount Limitation, will be deemed not to have accrued and will not be due and payable at any time thereafter, and we shall be discharged and released from any and all of our obligations to pay such cancelled interest (and additional amounts with respect thereto, if any) on the perpetual subordinated debt securities. Non-payment of such cancelled interest (or additional amounts with respect thereto, if any) shall not constitute a breach, a default, an event of default or an event of acceleration under the terms of the perpetual subordinated debt securities or the Perpetual Subordinated Debt Securities Indenture. Accordingly, holders of the perpetual subordinated debt securities will not have any claim therefor, whether or not interest is paid in respect of any other period.
Each holder of perpetual subordinated debt securities, by its subscribing for, purchasing or otherwise acquiring such securities, shall thereby agree that if any payment of interest in respect of the perpetual subordinated debt securities all or part of which should have not been paid to such holder upon the proper application of the optional or mandatory interest payment cancellation provisions is made to such holder, such payment shall be deemed null and void, and such holder or the Perpetual Subordinated Debt Securities Trustee or paying agent (to the extent it has not paid such amount to any holder) (as the case may be) shall be obliged to return the amount of the payment promptly and in any event within ten days of receiving notice of the payment, and shall also thereby agree that our liabilities to such holder in respect of interest on the perpetual subordinated debt securities which was cancelled under the optional or mandatory interest payment cancellation provisions shall not be set off against any liabilities of such holder owed to us.
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Notices of Cancellation of Interest Payments
If we determine to cancel all or part of a payment of interest on the perpetual subordinated debt securities in our sole discretion as described under “—Optional Cancellation of Interest Payments,” including pursuant to any capital distribution constraints plan, or if we cancel all or part of a payment of interest (including additional amounts with respect thereto, if any) on the perpetual subordinated debt securities because such cancellation is required due to the Interest Payable Amount Limitation, we will endeavor to provide a written notice of such cancellation to the holders of the perpetual subordinated debt securities, the Perpetual Subordinated Debt Securities Trustee and the paying agent in accordance with the terms of the Perpetual Subordinated Debt Securities Indenture at least ten business days prior to the relevant interest payment date. If such notice is to be delayed, we will endeavor to provide such notice as soon as practicable. Such notice shall include, (i) if we determine to cancel all or part of a payment of interest on the perpetual subordinated debt securities in our sole discretion as described under “—Optional Cancellation of Interest Payments,” including pursuant to any capital distribution constraints plan, the amount of the interest on the perpetual subordinated debt securities to be cancelled and the amount of interest on the perpetual subordinated debt securities to be paid (if any), or (ii) if we cancel all or part of a payment of interest (including additional amounts with respect thereto, if any) on the perpetual subordinated debt securities because such cancellation is required due to the Interest Payable Amount Limitation, the Interest Payable Amount applicable to all of the relevant series of the perpetual subordinated debt securities, on the relevant interest payment date. Any failure or delay by us to provide such notice will not have any impact on the effectiveness of, or otherwise invalidate, any such cancellation of interest payment, nor give holders of the perpetual subordinated debt securities any rights as a result of such failure.
Calculating Interest Payments upon the Occurrence of a Capital Ratio Event or Write-Up Date
If one or more Capital Ratio Event(s) occur during an interest period, the perpetual subordinated debt securities shall, for the entirety of such interest period, bear interest based on the Current Principal Amount of the perpetual subordinated debt securities on the immediately following interest payment date, after giving effect to the Going Concern Write-Down(s) as if the Going Concern Write-Down(s) resulting from such Capital Ratio Event(s) had occurred on the first day of such interest period.
If a Write-Up Date (as defined below) occurs during an interest period, the perpetual subordinated debt securities shall bear interest for such interest period as follows:
| (i) | for the portion of the interest period beginning on, and including, the first day of such interest period and ending on, but excluding, the first Write-Up Date, the perpetual subordinated debt securities shall bear interest based on the Current Principal Amount of the perpetual subordinated debt securities on the date immediately preceding such Write-Up Date, without giving effect to the Write-Up; provided, however, that, in the case where one or more Capital Ratio Event(s) occurs during a period beginning on, and including, such first Write-Up Date and ending on, but excluding, the immediately following interest payment date, and the smallest among the Current Principal Amount of the perpetual subordinated debt securities on respective dates during such period is less than the Current Principal Amount of the perpetual subordinated debt securities on the date immediately preceding such Write-Up Date, the perpetual subordinated debt securities shall bear interest based on such smallest Current Principal Amount of the perpetual subordinated debt securities; |
| (ii) | for the portion of the interest period, if any, beginning on, and including, the date immediately succeeding the relevant Write-Up Date and ending on, but excluding, the immediately following Write-Up Date, the perpetual subordinated debt securities shall bear interest based on the Current Principal Amount of the perpetual subordinated debt securities on the date immediately preceding such immediately following Write-Up Date, without giving effect to the Write-Up occurring on such immediately following Write-Up Date; provided, however, that, in the case where one or more Capital Ratio Event(s) occurs during a period beginning on, and including, such immediately following Write-Up Date and ending on, but excluding, the immediately following interest payment |
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| date, and the smallest among the Current Principal Amount of the perpetual subordinated debt securities on respective dates during such period is less than the Current Principal Amount of the perpetual subordinated debt securities on the date immediately preceding such immediately following Write-Up Date, the perpetual subordinated debt securities shall bear interest based on such smallest Current Principal Amount of the perpetual subordinated debt securities; and |
| (iii) | for the portion of the interest period beginning on, and including, the last Write-Up Date in such interest period and ending on, but excluding, the immediately following interest payment date, the perpetual subordinated debt securities shall bear interest on the Current Principal Amount of the perpetual subordinated debt securities on the immediately following interest payment date, after giving effect to the Write-Up. |
For subsequent interest periods, the perpetual subordinated debt securities shall continue to bear interest based on such Current Principal Amount of the perpetual subordinated debt securities on the relevant interest payment date until any subsequent interest period during which one or more Capital Ratio Event(s) or a Write-Up Date occur again in accordance with the terms of the perpetual subordinated debt securities.
Agreement to Interest Cancellation
By subscribing for, purchasing or otherwise acquiring the perpetual subordinated debt securities, holders of the perpetual subordinated debt securities acknowledge and agree (but not solely limited to the following) that:
| (a) | no amount of interest (including additional amounts with respect thereto, if any) shall become due and payable in respect of the relevant interest period to the extent that it has been (x) cancelled (in whole or in part) by us at our sole discretion (including pursuant to any capital distribution constraints plan) and/or (y) required to be cancelled (in whole or in part) as a result of the Interest Payable Amount Limitation, and such holders shall be bound by the interest cancellation provisions; |
| (b) | a cancellation of interest (including additional amounts with respect thereto, if any) (in each case, in whole or in part) in accordance with the terms of the Perpetual Subordinated Debt Securities Indenture shall not constitute a breach, a default, an event of default or an event of acceleration under the terms of the perpetual subordinated debt securities; |
| (c) | interest (including additional amounts with respect thereto, if any) will only be due and payable on an interest payment date to the extent it is not cancelled in accordance with the provisions described under “—Cancellation of Interest Payments;” |
| (d) | any interest (or additional amounts with respect thereto, if any) cancelled (in each case, in whole or in part) in the circumstances described above shall not be due and shall not accumulate or be payable at any time thereafter, and holders of the perpetual subordinated debt securities shall have no rights thereto or to receive any additional interest or compensation as a result of such cancellation; |
| (e) | except as otherwise described above or prohibited by applicable law or regulations, we have the right to use the funds from cancelled payments of interest (including additional amounts with respect thereto, if any) without restriction; and |
| (f) | such holder shall be deemed to have authorized, directed and requested DTC and any other intermediary and the paying agent to take any and all necessary action, if required, to implement an interest payment cancellation of the perpetual subordinated debt securities without any further action or direction on the part of such holder. |
Payment of Additional Amounts
The Japanese government may require us to withhold or deduct amounts from payments on the principal (and premium, if any) or interest on the perpetual subordinated debt securities, as the case may be, for taxes,
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duties, assessments or governmental charges. If a withholding or deduction of this type is required, we may be required to pay you an additional amount so that the net amounts you receive after such withholding or deduction will be the amount specified in the security to which you are entitled.
Payments will be made without withholding or deduction for or on account of any present or future Japanese taxes, unless such withholding or deduction is required by law. In that event, we shall pay to the holders such additional amounts as will result in the receipt by or on behalf of the holders or beneficial owners of such amounts as would have been received by them had no such withholding or deduction been required, provided that, no additional amounts will be payable with respect to any perpetual subordinated debt security (a) to, or to a third party on behalf of, a holder or a beneficial owner who is an individual non-resident of Japan or a non-Japanese corporation and is liable for such Japanese taxes in respect of such perpetual subordinated debt security by reason of its (i) having some connection with Japan other than the mere holding of such perpetual subordinated debt security or (ii) being a specially-related person of ours; or (b) to, or to a third party on behalf of, a holder or a beneficial owner who would otherwise be exempt from any such withholding or deduction but who fails to comply with any applicable requirement to provide interest recipient information (as defined below) or to submit a written application for tax exemption (as defined below) to the paying agent to whom the perpetual subordinated debt securities are presented (if presentation is required), or whose interest recipient information is not duly communicated through the participant (as defined below) and the relevant clearing organization to such paying agent; or (c) to, or to a third party on behalf of, a holder or a beneficial owner who is for Japanese tax purposes treated as an individual resident of Japan or a Japanese corporation (except for (A) a designated financial institution (as defined below) which complies with the requirement to provide interest recipient information or to submit a written application for tax exemption and (B) an individual resident of Japan or a Japanese corporation who duly notifies (directly or through the participant or otherwise) the relevant paying agent of its status as not being subject to Japanese taxes to be withheld or deducted by us by reason of such individual resident of Japan or Japanese corporation receiving interest on the relevant perpetual subordinated debt security through a payment handling agent in Japan appointed by it); or (d) if the perpetual subordinated debt securities are presented for payment (if presentation is required) more than 30 days after the date on which such payment first becomes due or after the date on which the full amount payable is duly provided for, whichever occurs later, except to the extent that the holder of the perpetual subordinated debt securities would have been entitled to such additional amounts on presenting the same for payment on the last day of such 30-day period; or (e) any combination of (a) through (d).
Additional amounts will not be paid with respect to any payment on the perpetual subordinated debt securities to or on behalf of a holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of Japan to be included in the income, for tax purposes, of a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner who, in each case, would not have been entitled to the additional amounts had such beneficiary, settlor, member or beneficial owner been the holder of the perpetual subordinated debt securities. The obligation to pay additional amounts with respect to any taxes, duties, assessments or governmental charges will not apply to (A) any estate, inheritance, gift, sales, transfer, personal property or any similar tax, duty, assessment or governmental charge or (B) any tax, duty, assessment or governmental charge which is payable otherwise than by deduction or withholding from payments of principal of (and premium, if any) or interest on the perpetual subordinated debt securities. References to principal (and premium, if any) and interest in respect of the perpetual subordinated debt securities will be deemed to include any additional amounts due which may be payable in respect of the principal (or premium, if any) or interest.
If perpetual subordinated debt securities are held through a participant, in order to receive payments free of withholding or deduction by us for, or on account of, Japanese taxes, if the relevant beneficial owner is (A) an individual non-resident of Japan or a non-Japanese corporation (other than a specially-related person of ours) or (B) a designated financial institution, such beneficial owner shall, at the time of entrusting a participant with the custody of the relevant perpetual subordinated debt securities, provide the interest recipient information, and
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advise the participant if the beneficial owner ceases to be so exempted (including where the beneficial owner who is an individual non-resident of Japan or a non-Japanese corporation becomes a specially-related person of ours).
If perpetual subordinated debt securities are not held by a participant, in order to receive payments free of withholding or deduction by us for, or on account of, Japanese taxes, if the relevant beneficial owner is (A) an individual non-resident of Japan or a non-Japanese corporation (other than a specially-related person of ours) or (B) a designated financial institution, such beneficial owner shall, prior to each time at which it receives interest, submit to the relevant paying agent a “written application for tax exemption” (hikazei tekiyo shinkokusho), in a form obtainable from the paying agent stating, inter alia, the name and address of the beneficial owner, the title of the perpetual subordinated debt securities, the relevant interest payment date, the amount of interest and the fact that the beneficial owner is qualified to submit the written application for tax exemption, together with documentary evidence regarding its identity and residence.
No additional amounts will be payable for or on account of any deduction or withholding imposed pursuant to FATCA, any intergovernmental agreement entered into with respect to FATCA, or any law, regulation or other official guidance enacted in any jurisdiction implementing, or relating to, FATCA, similar legislation under the laws of any other jurisdiction, or any such intergovernmental agreement.
If there is any withholding or deduction for or on account of Japanese taxes with respect to payments on any perpetual subordinated debt securities, we will use reasonable efforts to obtain certified copies of tax receipts evidencing the payment of such Japanese taxes from the Japanese taxing authority imposing such Japanese taxes, and if certified copies are not available, we will use reasonable efforts to obtain other evidence of payment satisfactory to the Perpetual Subordinated Debt Securities Trustee. The Perpetual Subordinated Debt Securities Trustee will make such certified copies or other evidence available to the securityholders or the beneficial owners of the perpetual subordinated debt securities upon reasonable request to the Perpetual Subordinated Debt Securities Trustee.
We will pay all stamp, court or documentary taxes or any excise or property taxes, charges or similar levies and other duties, if any, which may be imposed by Japan, the United States or any political subdivision or any taxing authority thereof or therein, with respect to the Perpetual Subordinated Debt Securities Indenture or any indenture supplemental thereto, or as a consequence of the initial issuance, execution, delivery, registration or enforcement of the perpetual subordinated debt securities.
Governing Law
The Perpetual Subordinated Debt Securities Indenture and the perpetual subordinated debt securities will be governed by and construed in accordance with, New York law.
Consent to Service of Process and Submission to Jurisdiction
Under the Perpetual Subordinated Debt Securities Indenture, we will designate Nomura Holding America Inc. (or any successor corporation) as our authorized agent for service of process in any legal action or proceeding arising out of or relating to the Perpetual Subordinated Debt Securities Indenture or any perpetual subordinated debt securities brought in any state or Federal court in the Borough of Manhattan, The City of New York, New York, United States of America, and we irrevocably submit to the jurisdiction of those courts. However, upon the occurrence of a Liquidation Event, holders of the perpetual subordinated debt securities may be required as a practical matter to pursue their claims with respect to the perpetual subordinated debt securities in Japan in accordance with the subordination provisions of the perpetual subordinated debt securities.
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Currency of Perpetual Subordinated Debt Securities
Amounts that become due and payable on your perpetual subordinated debt security in cash will be payable in a specified currency. The specified currency for your perpetual subordinated debt security will be U.S. dollars, unless your prospectus supplement states otherwise. Some perpetual subordinated debt securities may have different specified currencies for principal and interest. You will have to pay for your perpetual subordinated debt securities by delivering the requisite amount of the specified currency for the principal to Nomura Securities International, Inc. or another firm that we name in your prospectus supplement, unless other arrangements have been made between you and us or you and Nomura Securities International, Inc. We will make payments on your perpetual subordinated debt securities in the specified currency.
Book-Entry; Delivery and Form
Each perpetual subordinated debt security in registered form will be represented either by a certificate issued in definitive form to a particular investor or by one or more global securities representing the entire issuance of securities. We refer to those who have securities registered in their own names, on the books that we or the Perpetual Subordinated Debt Securities Trustee or other agent maintain for this purpose, as the “holders” of those perpetual subordinated debt securities. These persons are the legal holders of the perpetual subordinated debt securities. We refer to those who, indirectly through others, own beneficial interests in securities that are not registered in their own names as indirect owners of those securities. As we discuss below, indirect owners are not legal holders, and investors in securities issued in book-entry form or in street name will be indirect owners.
Global Security
We intend to initially issue each perpetual subordinated debt security in book-entry form only. Each perpetual subordinated debt security issued in book-entry form will be represented by one or more global securities that we deposit with and register in the name of one or more financial institutions or clearing systems, or their nominees, which we select. A financial institution or clearing system that we select for any perpetual subordinated debt security for this purpose is called the “depositary” for that perpetual subordinated debt security. A perpetual subordinated debt security will usually have only one depositary but it may have more.
Each series of perpetual subordinated debt securities will have one or more of the following as the depositaries:
| • | DTC; |
| • | a financial institution holding the perpetual subordinated debt securities on behalf of Euroclear; |
| • | a financial institution holding the perpetual subordinated debt securities on behalf of Clearstream; and |
| • | any other clearing system or financial institution named in the applicable prospectus supplement. |
The depositaries named above may also be participants in one another’s clearing systems. Thus, for example, if DTC is the depositary for a global security, investors may hold beneficial interests in that security through Euroclear or Clearstream, as DTC participants. The depositary or depositaries for your perpetual subordinated debt securities will be named in your prospectus supplement; if none is named, the depositary will be DTC.
A global security may not be transferred to or registered in the name of anyone other than the depositary or its nominee, unless special termination situations arise. We describe those situations below under “—Holder’s Option to Obtain a Non-Global Security; Special Situations When a Global Security Will Be Terminated.” As a result of these arrangements, the depositary, or its nominee, will be the sole registered owner and holder of all perpetual subordinated debt securities represented by a global security, and investors will be permitted to own only indirect interests in a global security. Indirect interests must be held by means of an account with a broker,
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bank or other financial institution that in turn has an account with the depositary or with another institution that does. Thus, an investor whose perpetual subordinated debt security is represented by a global security will not be a holder of the security, but only an indirect owner of an interest in the global security.
If the prospectus supplement for a particular perpetual subordinated debt security indicates that the perpetual subordinated debt security will be issued in global form only, then the perpetual subordinated debt security will be represented by one or more global securities at all times unless and until the global securities are terminated. We describe the situations in which this can occur below under “—Holder’s Option to Obtain a Non-Global Security; Special Situations When a Global Security Will Be Terminated.” If termination occurs, we may issue the perpetual subordinated debt securities through another book-entry clearing system or decide that the perpetual subordinated debt securities may no longer be held through any book-entry clearing system.
Holder’s Option to Obtain a Non-Global Security; Special Situations When a Global Security Will Be Terminated
If we issue any series of perpetual subordinated debt securities in book-entry form but we choose to give the beneficial owners of that series the right to obtain non-global securities, any beneficial owner entitled to obtain non-global securities may do so by following the applicable procedures of the depositary, any transfer agent or registrar for that series and that owner’s bank, broker or other financial institution through which that owner holds its beneficial interest in the perpetual subordinated debt securities. For example, in the case of a global security representing preferred stock or depositary shares, a beneficial owner will be entitled to obtain a non-global security representing its interest by making a written request to the transfer agent or other agent designated by us. If you are entitled to request a non-global certificate and wish to do so, you will need to allow sufficient lead time to enable us or our agent to prepare the requested certificate.
In addition, in a few special situations described below, a global security will be terminated and interests in it will be exchanged for certificates in non-global form representing the perpetual subordinated debt securities it represented. After that exchange, the choice of whether to hold the perpetual subordinated debt securities directly or in street name will be up to the investor. Investors must consult their own banks or brokers to find out how to have their interests in a global security transferred on termination to their own names, so that they will be holders.
The special situations for termination of a global security are as follows:
| • | if the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary for that global security and we do not appoint another institution to act as depositary within 60 days; or |
| • | if we notify the Perpetual Subordinated Debt Securities Trustee that we wish to terminate that global security. |
If a global security is terminated, only the depositary, and not we or the Perpetual Subordinated Debt Securities Trustee, is responsible for deciding the names of the institutions in whose names the perpetual subordinated debt securities represented by the global security will be registered and, therefore, who will be the holders of those securities.
Clearance and Settlement
The principal clearing systems we will use are the book-entry systems operated by DTC in the United States, Clearstream in Luxembourg and Euroclear in Belgium. These systems have established electronic securities and payment, transfer, processing, depositary and custodial links among themselves and others, either directly or indirectly through custodians and depositaries. These links allow securities to be issued, held and transferred among the clearing systems without the physical transfer of certificates.
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Special procedures to facilitate clearance and settlement have been established among these clearing systems to trade securities across borders in the secondary market. Where payments for perpetual subordinated debt securities we issue in global form will be made in U.S. dollars, these procedures can be used for cross-market transfers and the perpetual subordinated debt securities will be cleared and settled on a delivery against payment basis.
If we issue perpetual subordinated debt securities to you outside of the United States, its territories and possessions, you must initially hold your interests through Euroclear, Clearstream or the clearance system that is described in the applicable prospectus supplement. Cross-market transfers of securities that are not in global form may be cleared and settled in accordance with other procedures that may be established among the clearing systems for these securities.
Clearstream and Euroclear hold interests on behalf of their participants through customers’ securities accounts in the names of Clearstream and Euroclear on the books of their respective depositories, which, in the case of securities for which a global security in registered form is deposited with DTC, in turn hold such interests in customers’ securities accounts in the depositories’ names on the books of DTC.
The policies of DTC, Clearstream and Euroclear will govern payments, transfers, exchanges and other matters relating to your interest in securities held by them. This is also true for any other clearance system that may be named in a prospectus supplement. We have no responsibility for any aspect of the actions of DTC, Clearstream or Euroclear or any of their direct or indirect participants. We have no responsibility for any aspect of the records kept by DTC, Clearstream or Euroclear or any of their direct or indirect participants. We also do not supervise these systems in any way. This is also true for any other clearing system indicated in a prospectus supplement.
DTC, Clearstream, Euroclear and their participants perform these clearance and settlement functions under agreements they have made with one another or with their customers. You should be aware that they are not obligated to perform these procedures and may modify them or discontinue them at any time. The description of the clearing systems in this section reflects our understanding of the rules and procedures of DTC, Clearstream and Euroclear as they are currently in effect. Those systems could change their rules and procedures at any time.
DTC
DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities deposited with it by its participants and facilitates the settlement of transactions among its participants in such securities through electronic computerized book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. DTC’s participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is partially owned by these participants or their representatives. Access to DTC’s book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant of DTC, either directly or indirectly. According to DTC, the foregoing information with respect to DTC has been provided to the financial community for informational purposes only and is not intended to serve as a representation, warranty or contract modification of any kind. The rules applicable to DTC and DTC participants are on file with the SEC.
If the perpetual subordinated debt securities are issued in the form of registered global securities, such perpetual subordinated debt security will be deposited with DTC on the closing date. This means that we will not issue certificates to each holder. If we issue one global note with respect to each series of perpetual subordinated debt securities to DTC, DTC will keep a computerized record of its participants whose clients have purchased the
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perpetual subordinated debt securities. The participant will then keep a record of its clients who purchased the perpetual subordinated debt securities. Unless it is exchanged in whole or in part for a certificated perpetual subordinated debt security, a global security may not be transferred; except that DTC, its nominees, and their successors may transfer a global security as a whole to one another.
Beneficial interests in the global securities will be shown on, and transfers of the global securities will be made only through, records maintained by DTC and its participants. We will wire principal and interest payments to DTC’s nominee. We and the Perpetual Subordinated Debt Securities Trustee will treat DTC’s nominee as the owner of the global securities for all purposes. Accordingly, we, the Perpetual Subordinated Debt Securities Trustee and any paying agent will have no direct responsibility or liability to pay amounts due on the global securities to owners of beneficial interests in the global security.
It is DTC’s current practice, upon receipt of any payment of principal or interest, to credit direct participants’ accounts on the payment date according to their respective holdings of beneficial interest in the global security as shown on DTC’s records. In addition, it is DTC’s current practice to assign any consenting or voting right to direct participants whose accounts are credited with securities on a record date, by using an omnibus proxy. Payments by participants to owners of beneficial interest in the global security, and voting by participants, will be governed by the customary practices between the participants and owners of beneficial interest, as is the case with securities held for the account of customers registered in “street name.” However, payments will be the responsibility of the participants and not of DTC, the Perpetual Subordinated Debt Securities Trustee or us.
Clearstream
Clearstream was incorporated as a limited liability company under Luxembourg law. Clearstream holds securities for its customers and facilitates the clearance and settlement of securities transactions between Clearstream customers through electronic book-entry changes in accounts of Clearstream customers, thus eliminating the need for physical movement of certificates. Clearstream provides to its customers, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities, securities lending and borrowing and collateral management. Clearstream interfaces with domestic markets in a number of countries. Clearstream has established an electronic bridge with Euroclear Bank S.A./N.V., the operator of the Euroclear System, to facilitate settlement of trades between Clearstream and Euroclear.
As a registered bank in Luxembourg, Clearstream is subject to regulation by the Luxembourg Commission for the Supervision of the Financial Sector. Clearstream customers are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. In the United States, Clearstream customers are limited to securities brokers and dealers and banks, and may include the underwriters for the perpetual subordinated debt securities offered under any prospectus supplement. Other institutions that maintain a custodial relationship with a Clearstream customer may obtain indirect access to Clearstream. Clearstream is an indirect participant in DTC.
Distributions with respect to the perpetual subordinated debt securities held beneficially through Clearstream will be credited to cash accounts of Clearstream customers in accordance with its rules and procedures, to the extent received by Clearstream.
Euroclear
Euroclear was created in 1968 to hold securities for participants of Euroclear and to clear and settle transactions between Euroclear participants through simultaneous electronic book-entry delivery against payment, thus eliminating the need for physical movement of certificates and risk from lack of simultaneous transfers of securities and cash. Transactions may now be settled in many currencies, including United States dollars and Japanese yen. Euroclear provides various other services, including securities lending and borrowing, and interfaces with domestic markets in several countries generally similar to the arrangements for cross-market transfers with DTC described below.
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Euroclear is operated by the Euroclear Operator, under contract with the “Euroclear Clearance System. The Euroclear Operator conducts all operations, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the Euroclear Clearance System. The Euroclear Clearance System establishes policy for Euroclear on behalf of Euroclear participants. Euroclear participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include the underwriters for the perpetual subordinated debt securities offered under any prospectus supplement. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly. Euroclear is an indirect participant in DTC.
Distributions with respect to the perpetual subordinated debt securities held beneficially through Euroclear will be credited to the cash accounts of Euroclear participants in accordance with the Euroclear terms and conditions, to the extent received by the Euroclear Operator and by Euroclear.
Settlement
You will be required to make your initial payment for the perpetual subordinated debt securities in immediately available funds. Secondary market trading between DTC participants will occur in the ordinary way in accordance with DTC rules and will be settled in immediately available funds using DTC’s Same-Day Funds Settlement System. Secondary market trading between Clearstream participants and/or Euroclear participants will occur in the ordinary way in accordance with the applicable rules and operating procedures of Clearstream and Euroclear and will be settled using the procedures applicable to conventional eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Clearstream participants or Euroclear participants, on the other, will be effected in DTC in accordance with DTC rules on behalf of the relevant European international clearing system by its U.S. depositary; however, such cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in such system in accordance with its rules and procedures and within its established deadlines (based on European time). The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to the U.S. depositary to take action to effect final settlement on its behalf by delivering or receiving perpetual subordinated debt securities in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream participants and Euroclear participants may not deliver instructions directly to their respective U.S. depositaries.
Because of time-zone differences, credits of securities received in Clearstream or Euroclear as a result of a transaction with a DTC participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. Such credits or any transactions in such securities settled during such processing will be reported to the relevant Clearstream participants or Euroclear participants on such business day. Cash received in Clearstream or Euroclear as a result of sales of securities by or through a Clearstream customer or a Euroclear participant to a DTC participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream or Euroclear cash account only as of the business day following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of securities among participants of DTC, Clearstream and Euroclear, they are under no obligation to perform or continue to perform such procedures and such procedures may be discontinued at any time. The perpetual subordinated debt securities have been accepted for clearance through DTC, Clearstream and Euroclear.
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Other Clearing Systems
We may choose any other clearing system for a particular series of perpetual subordinated debt securities. The clearance and settlement procedures for the clearing system we choose will be described in the applicable prospectus supplement.
Authentication and Delivery
At any time and from time to time after the execution and delivery of the Perpetual Subordinated Debt Securities Indenture, we may deliver perpetual subordinated debt securities of any series to the Perpetual Subordinated Debt Securities Trustee for authentication, and the Perpetual Subordinated Debt Securities Trustee shall then authenticate and deliver such securities to or upon our written order, signed by an authorized officer of ours, without any further action by us. In authenticating the perpetual subordinated debt securities and accepting the additional responsibilities under the Perpetual Subordinated Debt Securities Indenture, the Perpetual Subordinated Debt Securities Trustee shall be entitled to receive, and shall be fully protected in relying upon, various documentation from us, including copies of the resolution of our board of directors authorizing the issuance of securities, any supplemental indenture, officer’s certificates and opinions from legal counsel.
Repurchases and Optional Redemption
Notwithstanding anything to the contrary contained in the terms of the perpetual subordinated debt securities, any redemption under the perpetual subordinated debt securities shall be subject to the going concern, non-viability and bankruptcy write-down provisions, the write-up provisions, the interest cancellation provisions, and the subordination provisions, each described herein.
Repurchase
We or any of our subsidiaries may, at any time, subject to prior confirmation of the FSA (if such confirmation is required under the FIEA or any other applicable laws and regulations then in effect), purchase any or all of the perpetual subordinated debt securities in the open market or otherwise at any price in accordance with any applicable law or regulation. Subject to applicable law, neither we nor any of our subsidiaries shall have any obligation to purchase or offer to purchase any perpetual subordinated debt securities held by any holder as a result of our or its purchase or offer to purchase perpetual subordinated debt securities held by any other holder in the open market or otherwise. Any such perpetual subordinated debt securities purchased by us or any of our subsidiaries may, at our discretion or the discretion of the relevant subsidiaries, as the case may be, be held or resold or surrendered to the relevant trustee for cancellation by us or any such subsidiary, as the case may be. The perpetual subordinated debt securities so purchased, while held by or on behalf of us or any such subsidiary, as the case may be, shall not entitle the holder to vote at any meetings of the holders of the relevant series of perpetual subordinated debt securities and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the holders of such series of perpetual subordinated debt securities.
Optional Redemption
We may, subject to prior confirmation of the FSA (if such confirmation is required under the FIEA or any other applicable laws and regulations then in effect), call all, but not less than all, of the relevant perpetual subordinated debt securities of a series for redemption, on an interest rate reset date occurring on or after the fifth year anniversary of the issuance of the relevant series of perpetual subordinated debt securities (as specified in the relevant prospectus supplement) or on the interest rate reset dates occurring on each five-year anniversary of such interest rate reset date thereafter unless as otherwise described in the applicable prospectus supplement for the relevant series of perpetual subordinated debt securities; provided, however, that we shall not have such option to redeem the perpetual subordinated debt securities, as described herein, if the Current Principal Amount of the perpetual subordinated debt securities has been subject to one or more Going Concern Write-Downs and such written down amount has not be reinstated in full on the date fixed for redemption.
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If we call the perpetual subordinated debt securities, we must pay you 100% of the Original Principal Amount of the relevant series of perpetual subordinated debt securities. We will also pay you accrued but unpaid interest through but not including the date fixed for redemption and any related additional amounts due on the date fixed for redemption. Perpetual subordinated debt securities will stop bearing interest on the redemption date, even if you do not collect your money. We will give notice to the Perpetual Subordinated Debt Securities Trustee of any redemption we propose to make at least 25 days, but not more than 60 days before the redemption date. Notice by the Perpetual Subordinated Debt Securities Trustee to participating institutions and by these participants to street name holders of indirect interests in the perpetual subordinated debt securities will be made according to arrangements among them and may be subject to statutory or regulatory requirements.
Notwithstanding any of the foregoing, we may give such notice in any manner permitted or required by DTC, Euroclear or Clearstream, as applicable.
Optional Tax Redemption
In the event of changes to Japanese tax law after the date of the applicable prospectus supplement, such that (i) we are or on the next interest payment date would be required to pay additional amounts, as described in “—Payment of Additional Amounts,” or (ii) any interest on the perpetual subordinated debt securities ceases to be treated as being a deductible expense for the purpose of our corporate tax (and, in each case of (i) or (ii) above, such event cannot be avoided by measures reasonably available to us), we may, subject to prior confirmation of the FSA (if such confirmation is required under the FIEA or any other applicable laws and regulations then in effect), call all, but not less than all, of the relevant perpetual subordinated debt securities of a series for redemption.
If we call the perpetual subordinated debt securities, we must pay you 100% of the Current Principal Amount of the relevant series of perpetual subordinated debt securities on the date fixed for redemption. We will also pay you accrued but unpaid interest through but not including the date fixed for redemption and any related additional amounts due on the date fixed for redemption. Perpetual subordinated debt securities will stop bearing interest on the redemption date, even if you do not collect your money. We will give notice to the Perpetual Subordinated Debt Securities Trustee of any redemption we propose to make at least 25 days, but not more than 60 days, before the redemption date. Notice by the Perpetual Subordinated Debt Securities Trustee to participating institutions and by these participants to street name holders of indirect interests in the perpetual subordinated debt securities will be made according to arrangements among them and may be subject to statutory or regulatory requirements.
Prior to giving notice of a tax redemption, we will deliver to the Perpetual Subordinated Debt Securities Trustee (x) a certificate signed by a duly authorized officer stating that we are entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to our right to so redeem have occurred, and (y) an opinion of legal counsel or tax advisor of recognized standing to the effect that the circumstances referred to above (i) or (ii) exist.
Notwithstanding any of the foregoing, we may give such notice in any manner permitted or required by DTC, Euroclear or Clearstream, as applicable.
Optional Regulatory Redemption
We may, subject to prior confirmation of the FSA (if such confirmation is required under the FIEA or any other applicable laws and regulations then in effect), call all, but not less than all, of the relevant perpetual subordinated debt securities of a series for redemption, if we determine, after consultation with the FSA or any other relevant Japanese supervisory authorities, that there is more than an insubstantial risk that the perpetual subordinated debt securities may not be partially or fully included in our Additional Tier 1 Capital under the applicable standards set forth in the Applicable Capital Adequacy Regulations.
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If we call the perpetual subordinated debt securities, we must pay you 100% of the Current Principal Amount of the relevant series of perpetual subordinated debt securities on the date fixed for redemption. We will also pay you accrued but unpaid interest through but not including the date fixed for redemption and any related additional amounts due on the date fixed for redemption. Perpetual subordinated debt securities will stop bearing interest on the redemption date, even if you do not collect your money. We will give notice to the Perpetual Subordinated Debt Securities Trustee of any redemption we propose to make at least 25 days, but not more than 60 days, before the redemption date. Notice by the Perpetual Subordinated Debt Securities Trustee to participating institutions and by these participants to street name holders of indirect interests in the perpetual subordinated debt securities will be made according to arrangements among them and may be subject to statutory or regulatory requirements.
Prior to giving notice of a regulatory redemption, we will deliver to the Perpetual Subordinated Debt Securities Trustee a certificate signed by a duly authorized officer stating that we are entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to our right to so redeem have occurred.
Notwithstanding any of the foregoing, we may give such notice in any manner permitted or required by DTC, Euroclear or Clearstream, as applicable.
Notices of Redemption
Any notice of redemption of the perpetual subordinated debt securities shall conform to the requirements with respect to such notice set forth in the Perpetual Subordinated Debt Securities Indenture and shall be irrevocable except in limited circumstances as described in the immediately following sentence. A redemption notice will be automatically rescinded and will have no force and effect, and no redemption amount will be due and payable, if a Capital Ratio Event, Non-Viability Event or Bankruptcy Event or a Liquidation Event occurs prior to the applicable redemption date, in which case the perpetual subordinated debt securities will be subject to a Going Concern Write-Down or a Write-Down and Cancellation as described under “—Write-Downs and Write-Ups” or the subordination provisions as described under “—Subordination,” as the case may be. If a redemption notice is rescinded for any of the reasons described in the previous sentence, we will endeavor to promptly deliver written notice to the holders of the perpetual subordinated debt securities and the Perpetual Subordinated Debt Securities Trustee, specifying the occurrence of the relevant event.
Write-Downs and Write-Ups
Write-Down upon a Capital Ratio Event (Going Concern Write-Down)
Notwithstanding anything to the contrary contained in the terms of the perpetual subordinated debt securities, upon the occurrence of a Capital Ratio Event until the relevant Going Concern Write-Down Date (as defined below), no Current Principal Amount of, or interest on, the perpetual subordinated debt securities (including additional amounts with respect thereto, if any) (other than with respect to the Current Principal Amount, interest and any additional amounts that have become due and payable on or before the date of the occurrence of the Capital Ratio Event and remain unpaid) shall thereafter become due to the extent equal to the sum of (A) the relevant Going Concern Write-Down Amount (as defined below) and (B) the amount of interest applicable to such relevant Going Concern Write-Down Amount. Furthermore, our obligations with respect to the payment of the Current Principal Amount of, or interest on, the perpetual subordinated debt securities (including additional amounts with respect thereto, if any) and any claims therefor (other than with respect to the Current Principal Amount, interest and any additional amounts that have become due and payable on or before the date of the occurrence of the Capital Ratio Event and remain unpaid) will be suspended to the extent equal to the sum of (A) the relevant Going Concern Write-Down Amount from the occurrence of the Capital Ratio Event until the relevant Going Concern Write-Down Date and (B) the amount of interest applicable to such relevant Going Concern Write-Down Amount.
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On a Going Concern Write-Down Date:
| (i) | the Current Principal Amount of the perpetual subordinated debt securities, except for principal that has become due and payable on or before the date of the occurrence of the Capital Ratio Event and remain unpaid, will be written down by an amount equal to the relevant Going Concern Write-Down Amount, the interest on the perpetual subordinated debt securities (including additional amounts with respect thereto, if any) will be written down by an amount equal to the interest on the relevant Going Concern Write-Down Amount, and we shall be discharged and released from any and all of our obligations to pay the Current Principal Amount of the perpetual subordinated debt securities in an amount equal to the relevant Going Concern Write-Down Amount and the interest on the perpetual subordinated debt securities (including additional amounts with respect thereto, if any) in an amount equal to the interest on the relevant Going Concern Write-Down Amount (including additional amounts with respect thereto, if any); |
| (ii) | our obligations shall remain with respect to (A) any accrued and unpaid interest on or the Current Principal Amount of the perpetual subordinated debt securities and (B) any additional amounts, in each case, if and only to the extent that such interest, the Current Principal Amount, or additional amounts, as applicable, has become due and payable to the holders of such perpetual subordinated debt securities on or before the date of the occurrence of the Capital Ratio Event and remain unpaid; and |
| (iii) | the holders of the perpetual subordinated debt securities will be deemed to have irrevocably waived their right to claim or receive, and will not have any rights against us, the Perpetual Subordinated Debt Securities Trustee or any agent with respect to, and cannot instruct the Perpetual Subordinated Debt Securities Trustee to enforce, the payment of the Current Principal Amount of the perpetual subordinated debt securities to the extent of the relevant Going Concern Write-Down Amount or interest on the relevant Going Concern Write-Down Amount (including additional amounts with respect thereto, if any), except as described in paragraph (ii) above. |
The events described in paragraphs (i) through (iii) are referred to as a “Going Concern Write-Down.”
A Capital Ratio Event may occur on any number of occasions and, accordingly, the perpetual subordinated debt securities may be written down on any number of occasions. For the avoidance of doubt, the Current Principal Amount of the perpetual subordinated debt securities may never be reduced to below one cent per $1,000 in Original Principal Amount as a result of any Going Concern Write-Down.
Except for claims with respect to payments of the Current Principal Amount of or interest on the perpetual subordinated debt securities (including additional amounts with respect thereto, if any) that have become due and payable on or before the date of the occurrence of a Capital Ratio Event and remain unpaid, as described above, upon the occurrence of the Capital Ratio Event, (a) the holders of the perpetual subordinated debt securities shall have no rights whatsoever under the Perpetual Subordinated Debt Securities Indenture or the perpetual subordinated debt securities to take any action or enforce any rights or to instruct the Perpetual Subordinated Debt Securities Trustee to take any action or enforce any rights whatsoever, (b) except for any indemnity or security provided by any holder in such instruction or related to such instruction, any instruction previously given to the Perpetual Subordinated Debt Securities Trustee by any holders shall cease automatically and shall be deemed null and void and of no further effect, (c) no holder may exercise, claim or plead any right of set-off, compensation or retention in respect of any amount owed to it by us arising under, or in connection with, the perpetual subordinated debt securities and each holder of perpetual subordinated debt securities shall, by virtue of its holding of any perpetual subordinated debt securities, be deemed to have irrevocably waived all such rights of set-off, compensation or retention and (d) no holder will be entitled to make any claim in any bankruptcy, insolvency, civil rehabilitation, corporate reorganization or liquidation proceedings involving us or have any ability to initiate or participate in any such proceedings or do so through a representative, in each case, to the extent such right, instruction, exercise, claim or pleading pertains to the Current Principal Amount of the
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perpetual subordinated debt securities that has been or will be subject to the relevant Going Concern Write-Down as a result of such Capital Ratio Event having occurred, or interest thereon (including additional amounts with respect thereto, if any), unless such Current Principal Amount has been reinstated, as described below under “—Write-Up upon a Return to Financial Health.”
We will endeavor, as soon as practicable after the occurrence of a Capital Ratio Event, to deliver a written notice (a “Going Concern Write-Down Notice”) to the holders of the perpetual subordinated debt securities, the Perpetual Subordinated Debt Securities Trustee and the paying agent in accordance with the terms of the Perpetual Subordinated Debt Securities Indenture, confirming, among other things, the occurrence of such Capital Ratio Event, the relevant Going Concern Write-Down Date, the relevant Going Concern Write-Down Amount and the Current Principal Amount of the perpetual subordinated debt securities on the relevant Going Concern Write-Down Date after giving effect to the relevant Going Concern Write-Down, in respect of all of the relevant series of the perpetual subordinated debt securities. Any failure or delay by us to deliver such Going Concern Write-Down Notice shall not change or delay the effect of the occurrence of the Capital Ratio Event on the Going Concern Write-Down taking place on the Going Concern Write-Down Date under the perpetual subordinated debt securities, nor give holders of the perpetual subordinated debt securities any rights as a result of such failure or delay.
In the case of a write-down of the perpetual subordinated debt securities to one cent per $1,000 in Original Principal Amount, following the receipt of a Going Concern Write-Down Notice by DTC, DTC will suspend all clearance and settlement of the perpetual subordinated debt securities through DTC. After such suspension has commenced, holders of beneficial interests in the perpetual subordinated debt securities will not be able to settle the transfer of any perpetual subordinated debt securities through DTC, and any sale or other transfer of the perpetual subordinated debt securities that a holder may have initiated prior to such suspension that is scheduled to settle after such suspension may be rejected by, and may not be settled within, DTC. Notwithstanding any delay in, or unavailability of procedures of, DTC reflecting the Going Concern Write-Down on its systems, the Going Concern Write-Down shall take place on the relevant Going Concern Write-Down Date. The relevant procedures for any perpetual subordinated debt securities held through any clearing organization other than DTC will be described in the applicable prospectus supplement.
A “Capital Ratio Event” will be deemed to have occurred when our Consolidated Common Equity Tier 1 Capital Ratio (as defined below), that we have reported or publicly announced, as applicable, in any of: (i) an annual consolidated financial condition report (renketsu kessan jokyo hyo) submitted by us to the FSA or any other relevant Japanese supervisory authority (including such report under the FIEA), (ii) an annual business report (jigyo hokokusho) submitted by us to the FSA or any other relevant Japanese supervisory authority (including such report under the FIEA), (iii) a report which describes the soundness of our management submitted by us to the FSA or any other relevant Japanese supervisory authority (including such report under the FIEA) (iv) a public announcement made by us in accordance with applicable Japanese law (including an announcement under the FIEA) or the rules of a relevant Japanese securities exchange, or (v) a report made by us to the FSA or any other relevant Japanese supervisory authority after consultation with the outside auditor of us following the results of an inspection of the FSA or any other relevant Japanese supervisory authority (including such report under the FIEA), has fallen below 5.125%; provided, however, that a Capital Ratio Event shall be deemed to have not occurred if prior to such report or public announcement, (a) we submit a plan to the FSA or any other competent regulatory authority, under which plan our Consolidated Common Equity Tier 1 Capital Ratio is expected to increase above 5.125% in the absence of a Going Concern Write-Down of the perpetual subordinated debt securities, and (b) the FSA or any other competent regulatory authority approves such plan. In such case, we will endeavor, as soon as practicable after we report or publicly announce, as applicable, our Consolidated Common Equity Tier 1 Capital Ratio, to deliver a written notice to the holders of the perpetual subordinated debt securities, the Perpetual Subordinated Debt Securities Trustee and the paying agent in accordance with the terms of the Perpetual Subordinated Debt Securities Indenture, confirming that a Capital Ratio Event shall be deemed to have not occurred. Any failure or delay by us to deliver such notice shall not
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change or delay the effect of the non-occurrence of the Capital Ratio Event on our payment obligations under the perpetual subordinated debt securities, nor give holders of the perpetual subordinated debt securities any rights as a result of such failure or delay.
“Consolidated Common Equity Tier 1 Capital Ratio” means, as of any date, our Common Equity Tier 1 risk-weighted capital ratio on a consolidated basis, as calculated in accordance with the applicable standards set forth in the Applicable Capital Adequacy Regulations, and shall also include any successor or substitute term applicable pursuant to the Applicable Capital Adequacy Regulations, as of such date.
“Going Concern Write-Down Amount” means, on any Going Concern Write-Down Date, the amount by which the Current Principal Amount outstanding of the perpetual subordinated debt securities per $1,000 in Original Principal Amount is to be reduced on such date, such amount being:
| (i) | the product of the Total Going Concern Write-Down Amount (as defined below) and a ratio, the numerator of which is the Current Principal Amount outstanding of the perpetual subordinated debt securities per $1,000 in Original Principal Amount, and the denominator of which is the aggregate amount of the Current Principal Amount outstanding of all of the perpetual subordinated debt securities and the Current Principal Amount outstanding of any Going Concern Write-Down Instruments (as defined below) (other than any Going Concern Full Write-Down Instrument (as defined below)) (rounding any amount less than a whole cent up to the nearest whole cent); or |
| (ii) | if the amount set forth in (i) is equal to or greater than the Current Principal Amount of the perpetual subordinated debt securities per $1,000 in Original Principal Amount, then the amount necessary to reduce the Current Principal Amount of the perpetual subordinated debt securities to one cent per $1,000 in Original Principal Amount. |
“Total Going Concern Write-Down Amount” means the amount determined by us after consultation with the FSA or any other relevant Japanese supervisory authority that would be sufficient in order to restore our Consolidated Common Equity Tier 1 Capital Ratio above 5.125% by the write-down of all or part of the Current Principal Amount outstanding of the perpetual subordinated debt securities and the Write-Down or Conversion (as defined below) of the Current Principal Amount outstanding of any Going Concern Write-Down Instrument (as defined below) (other than any Going Concern Full Write-Down Instrument); provided, however, that any amount subject to the Write-Down or Conversion of the Current Principal Amount outstanding of any Going Concern Write-Down Instrument (the “Going Concern Full Write-Down Instrument”) that by its terms provides for the Write-Down or Conversion of such instrument in excess of the amount that would have been subject to the Write-Down or Conversion assuming such instrument contained terms substantially equivalent to the going concern write-down provisions applicable to the perpetual subordinated debt securities as described herein shall be deducted from the Total Going Concern Write-Down Amount (and if the Total Going Concern Write-Down Amount becomes less than zero, the Total Going Concern Write-Down Amount shall be zero.).
For the purposes of the calculation of the Going Concern Write-Down Amount, the Current Principal Amount outstanding of the perpetual subordinated debt securities and the Current Principal Amount outstanding of any Going Concern Write-Down Instruments that are not denominated in Japanese yen shall initially be calculated in Japanese yen, and the Going Concern Write-Down Amount shall be initially calculated in Japanese yen and converted into U.S. dollars, each in a manner that we deem appropriate.
“Going Concern Write-Down Instrument” means Additional Tier 1 Liabilities and at any time instruments qualifying as Additional Tier 1 Capital under the Applicable Capital Adequacy Regulations that by their terms provide for the Write Down or Conversion of such instruments (other than the perpetual subordinated debt securities and Additional Tier 1 Liabilities) (including any such instruments issued or created by any Special Purpose Company).
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“Write-Down or Conversion” means, with respect to any Going Concern Write-Down Instrument, the write-down or, if applicable, conversion to shares of common stock of all or part of the Current Principal Amount outstanding of such Going Concern Write-Down Instrument (including an acquisition of shares of common stock in exchange for all or part of such Going Concern Write-Down Instruments by a holder of such Going Concern Write-Down Instruments pursuant to the Companies Act).
“Going Concern Write-Down Date” means the date that is determined by us after consultation with the FSA or any other relevant Japanese supervisory authority and shall be no later than twenty business days following the date of the relevant Going Concern Write-Down Notice.
Each holder of perpetual subordinated debt securities, by its subscribing for, purchasing or otherwise acquiring such securities, shall thereby agree that if any payment is made to its perpetual subordinated debt securities with respect to a payment obligation that was subject to a Going Concern Write-Down as described above, then the payment of such amount shall be deemed null and void, and such holder or the Perpetual Subordinated Debt Securities Trustee or paying agent (to the extent it has not paid such amount to any holder) (as the case may be) shall be obliged to return the amount of such payment within ten days after receiving notice of such null and void payment, and shall also thereby agree that our liabilities to such holder in respect of the perpetual subordinated debt securities which was subject to the Going Concern Write-Down as described above shall not be set off against any liabilities of such holder owed to us.
Write-Up upon a Return to Financial Health
Subject to the Applicable Capital Adequacy Regulations and other applicable laws and regulations, upon occurrence of a Write-Up Event (as defined below), we may elect to cause the Current Principal Amount of the outstanding perpetual subordinated debt securities that have been subject to one or more Going Concern Write-Downs to be increased by the relevant Write-Up Amount (as defined below) on a Write-Up Date, by reinstating an amount of principal that was previously subject to a Going Concern Write-Down by the relevant Write-Up Amount on such Write-Up Date. Each such reinstatement is referred to as a “Write-Up.”
Upon a Write-Up, claims of holders of the perpetual subordinated debt securities with respect to payments of principal of the perpetual subordinated debt securities that were previously waived upon the occurrence of a Going Concern Write-Down, and our obligations to pay the principal of the perpetual subordinated debt securities that were previously discharged and released upon the occurrence of a Going Concern Write-Down, shall be reinstated, and such waiver, discharge and release previously given or granted shall be of no further effect, to the extent of the relevant Write-Up Amount, without any retroactive effect, on the relevant Write-Up Date. See “—Cancellation of Interest Payments—Calculating Interest Payments upon the Occurrence of a Capital Ratio Event or Write-Up Date.”
The perpetual subordinated debt securities may be subject to one or more Write-Ups, but in no event shall the Current Principal Amount of such perpetual subordinated debt securities, after giving effect to any Write-Up, exceed the Original Principal Amount of such perpetual subordinated debt securities.
A “Write-Up Event” shall be deemed to occur when we determine, in our sole discretion and in accordance with the Applicable Capital Adequacy Regulations and other applicable laws and regulations, to reinstate an amount of principal that was previously subject to a Going Concern Write-Down after we obtain prior confirmation from the FSA or any other relevant Japanese supervisory authority that our Consolidated Common Equity Tier 1 Capital Ratio will remain at a sufficiently high level after giving effect to the relevant Write-Up of the perpetual subordinated debt securities (together with the write-up of any Write-Up Instruments (as defined below)).
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“Write-Up Amount” means the product of the total amount determined by us after consultation with the FSA or any other relevant Japanese supervisory authority by which the Current Principal Amount outstanding of all of the perpetual subordinated debt securities and the Current Principal Amount outstanding of any Write-Up Instruments is to be increased and a ratio, the numerator of which is $1,000 in the Original Principal Amount of the perpetual subordinated debt securities minus the Current Principal Amount outstanding of the perpetual subordinated debt securities per $1,000 in Original Principal Amount, and the denominator of which is the aggregate amount of (i) the Original Principal Amount of all of the perpetual subordinated debt securities minus the Current Principal Amount outstanding of all of the perpetual subordinated debt securities and (ii) the Original Principal Amount of any Write-Up Instruments minus the Current Principal Amount outstanding of any Write-Up Instruments (rounding any amount less than a whole cent down to the nearest whole cent).
For the purposes of the calculation of the Write-Up Amount, the Original Principal Amount and the Current Principal Amount outstanding of the perpetual subordinated debt securities and the Original Principal Amount and the Current Principal Amount outstanding of any Write-Up Instruments that are not denominated in Japanese yen shall initially be calculated in Japanese yen, and the Write-Up Amount shall be initially calculated in Japanese yen and converted into U.S. dollars, each in a manner that we deem appropriate.
“Write-Up Instrument” means any Going Concern Write-Down Instrument that includes provisions permitting the reinstatement of previously written-down principal amounts substantially similar to those applicable to the perpetual subordinated debt securities.
“Write-Up Date” means the date that is determined by us in our sole discretion after consultation with the FSA or any other relevant Japanese supervisory authority and shall be no later than twenty business days following the date of the relevant Write-Up Notice (as defined below).
Notwithstanding anything to the contrary contained in the terms of the perpetual subordinated debt securities, no Write-Up Event shall occur (i) after any date fixed for the redemption, (ii) after a Liquidation Claim becomes due and payable pursuant to the subordination provisions as described under “—Subordination,” or (iii) after an occurrence of a Non-Viability Event or a Bankruptcy Event.
We will endeavor, as soon as practicable after the occurrence of a Write-Up Event, to deliver a written notice (a “Write-Up Notice”), to the holders of the perpetual subordinated debt securities, the Perpetual Subordinated Debt Securities Trustee and the paying agent in accordance with the terms of the Perpetual Subordinated Debt Securities Indenture, confirming, among other things, our determination to effect a Write-Up, the relevant Write-Up Date, the relevant Write-Up Amount and the Current Principal Amount of the perpetual subordinated debt securities on the relevant Write-Up Date after giving effect to the relevant Write-Up, in respect of all of the relevant series of the perpetual subordinated debt securities.
Write-Down and Cancellation upon a Non-Viability Event or Bankruptcy Event (Write-Down and Cancellation)
Notwithstanding anything to the contrary contained in the terms of the perpetual subordinated debt securities, upon the occurrence of a Non-Viability Event until the Write-Down and Cancellation Date, no principal of, interest on, or other amount under, the perpetual subordinated debt securities (including additional amounts with respect thereto, if any) (other than with respect to principal, interest and any additional amounts that have become due and payable on or before the date of the occurrence of the Non-Viability Event and remain unpaid) shall thereafter become due, and our obligations with respect to the payment of any such amounts and any claims therefor (other than with respect to principal, interest and any additional amounts that have become due and payable on or before the date of the occurrence of the Non-Viability Event and remain unpaid) will be suspended from the occurrence of the Non-Viability Event until the Write-Down and Cancellation Date.
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On the Write-Down and Cancellation Date:
| (i) | principal of, or interest on, or any other amount under, the perpetual subordinated debt securities (including additional amounts with respect thereto, if any) will be permanently written down to zero, we shall be discharged and released from any and all of our obligations to pay principal of, interest on and any other amount under the perpetual subordinated debt securities (including additional amounts with respect thereto, if any), and the perpetual subordinated debt securities will be cancelled, in each case other than principal amount, interest and any additional amounts that have become due and payable on or before the date of the occurrence of the Non-Viability Event and remain unpaid; |
| (ii) | our obligations shall remain with respect to (A) any accrued and unpaid interest on or principal of the perpetual subordinated debt securities and (B) any additional amounts, in each case, if and only to the extent that such interest, principal or additional amounts, as applicable, has become due and payable to the holders of such perpetual subordinated debt securities on or before the date of the occurrence of the Non-Viability Event and remain unpaid; and |
| (iii) | the holders of the perpetual subordinated debt securities will be deemed to have irrevocably waived their right to claim or receive, and will not have any rights against us, the trustee or any agent with respect to, and cannot instruct the Perpetual Subordinated Debt Securities Trustee to enforce, payment of principal of, or interest on, or any other amount under, the perpetual subordinated debt securities (including additional amounts with respect thereto, if any), except as described in paragraph (ii) above. |
Notwithstanding anything to the contrary contained in the terms of the perpetual subordinated debt securities, upon the occurrence of a Bankruptcy Event, no principal of, interest on, or other amount under, the perpetual subordinated debt securities (including additional amounts with respect thereto, if any) (other than with respect to principal, interest and any additional amounts that have become due and payable on or before the date of the occurrence of the Bankruptcy Event and remain unpaid) shall thereafter become due, and immediately upon such occurrence:
| (i) | principal of, or interest on, or any other amount under, the perpetual subordinated debt securities (including additional amounts with respect thereto, if any) will be permanently written down to zero, we shall be discharged and released from any and all of our obligations to pay principal of, interest on and any other amount under the perpetual subordinated debt securities (including additional amounts with respect thereto, if any), and the perpetual subordinated debt securities will be cancelled, in each case other than principal amount, interest and any additional amounts that have become due and payable on or before the date of the occurrence of the Bankruptcy Event and remain unpaid; |
| (ii) | our obligations shall remain with respect to (A) any accrued and unpaid interest on or principal of the perpetual subordinated debt securities and (B) any additional amounts, in each case, if and only to the extent that such interest, principal or additional amounts, as applicable, has become due and payable to the holders of such perpetual subordinated debt securities on or before the date of the occurrence of the Bankruptcy Event and remain unpaid; and |
| (iii) | the holders of the perpetual subordinated debt securities will be deemed to have irrevocably waived their right to claim or receive, and will not have any rights against us, the trustee or any agent with respect to, and cannot instruct the Perpetual Subordinated Debt Securities Trustee to enforce, payment of principal of, or interest on, or any other amount under, the perpetual subordinated debt securities (including additional amounts with respect thereto, if any), except as described in paragraph (ii) above. |
The events described in paragraphs (i) through (iii) in the above two paragraphs are referred to as a “Write-Down and Cancellation.”
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Except for claims with respect to payments of principal of or interest on the perpetual subordinated debt securities (including additional amounts with respect thereto, if any) that have become due and payable on or before the date of the occurrence of the Non-Viability Event or Bankruptcy Event and remain unpaid, as the case may be and as described above, upon the occurrence of a Non-Viability Event or Bankruptcy Event, (a) the holders of the perpetual subordinated debt securities shall have no rights whatsoever under the Perpetual Subordinated Debt Securities Indenture or the perpetual subordinated debt securities to take any action or enforce any rights or to instruct the Perpetual Subordinated Debt Securities Trustee to take any action or enforce any rights whatsoever, (b) except for any indemnity or security provided by any holder in such instruction or related to such instruction, any instruction previously given to the Perpetual Subordinated Debt Securities Trustee by any holders shall cease automatically and shall be deemed null and void and of no further effect, (c) no holder may exercise, claim or plead any right of set-off, compensation or retention in respect of any amount owed to it by us arising under, or in connection with, the perpetual subordinated debt securities and each holder of perpetual subordinated debt securities shall, by virtue of its holding of any perpetual subordinated debt securities, be deemed to have irrevocably waived all such rights of set-off, compensation or retention and (d) no holder will be entitled to make any claim in any bankruptcy, insolvency, civil rehabilitation, corporate reorganization or liquidation proceedings involving us or have any ability to initiate or participate in any such proceedings or do so through a representative.
“Bankruptcy Event” means any of the following events:
| (a) | a competent court in Japan shall have commenced bankruptcy proceedings with respect to us pursuant to the provisions of the Bankruptcy Act or any successor legislation thereto; |
| (b) | a competent court in Japan shall have commenced corporate reorganization proceedings with respect to us pursuant to the provisions of the Corporate Reorganization Act or any successor legislation thereto; |
| (c) | a competent court in Japan shall have commenced civil rehabilitation proceedings with respect to us pursuant to the provisions of the Civil Rehabilitation Act or any successor legislation thereto; |
| (d) | a special liquidation proceeding (tokubetsu seisan) shall have commenced by or with respect to us under the Companies Act; or |
| (e) | we shall have become subject to bankruptcy, corporation reorganization, civil rehabilitation, special liquidation or other equivalent proceeding pursuant to any applicable law of any jurisdiction other than Japan. |
A “Non-Viability Event” will be deemed to have occurred at the time that the Prime Minister of Japan confirms (nintei) that any measures (tokutei dai nigō sochi) set forth in Article 126-2, Paragraph 1, Item 2 of the Deposit Insurance Act (or any successor provision thereto) need to be applied to us.
“Write-Down and Cancellation Date” means, upon the occurrence of a Non-Viability Event, the date that shall be determined by us after consultation with the FSA or any other relevant Japanese supervisory authority and shall be no later than ten business days following the date of the Write-Down and Cancellation Notice.
We will endeavor, as soon as practicable after the occurrence of a Non-Viability Event or a Bankruptcy Event, to deliver a written notice (a “Write-Down and Cancellation Notice”) to the holders of the perpetual subordinated debt securities, the Perpetual Subordinated Debt Securities Trustee and the paying agent in accordance with the terms of the Perpetual Subordinated Debt Securities Indenture, confirming, among other things, the occurrence of such Non-Viability Event or Bankruptcy Event and the Write-Down and Cancellation Date or the date of occurrence of the Bankruptcy Event, as applicable. Any failure or delay by us to provide a Write-Down and Cancellation Notice upon the occurrence of a Non-Viability Event or Bankruptcy Event shall not change or delay the effect of the occurrence of such Non-Viability Event or Bankruptcy Event on the Write-Down and Cancellation taking place on the Write-Down and Cancellation Date or upon the occurrence of the Bankruptcy Event, as applicable, under the perpetual subordinated debt securities, nor give holders of the perpetual subordinated debt securities any rights as a result of such failure or delay.
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Following the receipt of a Write-Down and Cancellation Notice by DTC, DTC will suspend all clearance and settlement of the perpetual subordinated debt securities through DTC. After such suspension has commenced, holders of beneficial interests in the perpetual subordinated debt securities will not be able to settle the transfer of any perpetual subordinated debt securities through DTC, and any sale or other transfer of the perpetual subordinated debt securities that a holder may have initiated prior to such suspension that is scheduled to settle after such suspension may be rejected by, and may not be settled within, DTC. Notwithstanding any delay in, or unavailability of procedures of, DTC reflecting the Non-Viability Write-Down on its systems, the Non-Viability Write-Down shall take place on the relevant Write-Down and Cancellation Date or upon the occurrence of the Bankruptcy Event, as applicable. The relevant procedures for any perpetual subordinated debt securities held through any clearing organization other than DTC will be described in the applicable prospectus supplement. See “Risk Factors—Risks Relating to the Perpetual Subordinated Debt Securities—Following a Non-Viability Event, a Bankruptcy Event or a Capital Ratio Event, clearance and settlement of perpetual subordinated debt securities will be suspended and may not be completed as expected or at all.
Each holder of perpetual subordinated debt securities, by its subscribing for, purchasing or otherwise acquiring such securities, shall thereby agree that if any payment is made to its perpetual subordinated debt securities with respect to a payment obligation that did not become due and payable on or before the date of the occurrence of a Non-Viability Event or Bankruptcy Event, as the case may be, then the payment of such amount shall be deemed null and void and such holder or the Perpetual Subordinated Debt Securities Trustee or paying agent (to the extent it has not paid such amount to any holder) (as the case may be) shall be obliged to return the amount of such payment within ten days after receiving notice of such null and void payment and shall also thereby agree that our liabilities to such holder in respect of the perpetual subordinated debt securities which was subject to the Write-Down and Cancellation as described above shall not be set off against any liabilities of such holder owed to us.
Agreement to Write-Down and Cancellation
By subscribing for, purchasing or otherwise acquiring the perpetual subordinated debt securities, holders of the perpetual subordinated debt securities consent to:
| (a) | upon the occurrence of a Capital Ratio Event and a Going Concern Write-Down of the perpetual subordinated debt securities, such holders being deemed to have irrevocably waived their right to claim or receive, not having any rights against us with respect to, and being unable to instruct the Perpetual Subordinated Debt Securities Trustee to enforce, the payment of Current Principal Amount of the perpetual subordinated debt securities to the extent of the relevant Going Concern Write-Down Amount or interest thereon (including additional amounts with respect thereto, if any), as described under “—Write-Down upon a Capital Ratio Event (Going Concern Write-Down),” and being bound by the write-down provisions; |
| (b) | upon the occurrence of a Non-Viability Event or a Bankruptcy Event and a Write-Down and Cancellation of the perpetual subordinated debt securities, such holders being deemed to have irrevocably waived their right to claim or receive, not having any rights against us with respect to, and being unable to instruct the Perpetual Subordinated Debt Securities Trustee to enforce, the payment of principal of or interest on the perpetual subordinated debt securities (including additional amounts with respect thereto, if any) (except for any payments of principal, interest or other amounts that have become due and payable on or before the date of the occurrence of such Non-Viability Event or Bankruptcy Event and remain unpaid), as described under “—Write-Down and Cancellation upon a Non-Viability Event or Bankruptcy Event (Write-Down and Cancellation),” and being bound by the write-down provisions; |
| (c) | upon the occurrence of a Capital Ratio Event, Non-Viability Event, Bankruptcy Event or a Liquidation Event after the issuance of a redemption notice, (1) the automatic rescission of any redemption notice, (2) no redemption amount becoming due and payable, and (3) the perpetual |
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| subordinated debt securities becoming subject to a Going Concern Write-Down or a Write-Down and Cancellation or the subordination provisions, as the case may be, as described under “—Repurchases and Optional Redemption—Notices of Redemption;” |
| (d) | no such Going Concern Write-Down, Write-Down and Cancellation, or rescission in accordance with the terms of the Perpetual Subordinated Debt Securities Indenture constituting a default or breach in payment or otherwise under the terms of the perpetual subordinated debt securities; and |
| (e) | such holder being deemed to have authorized, directed and requested DTC (or any other applicable clearing organization) and any direct participant in DTC or other intermediary through which it holds the perpetual subordinated debt securities, the Perpetual Subordinated Debt Securities Trustee and the registrar to take any and all necessary action, if required, to implement a Going Concern Write-Down or a Write-Down and Cancellation of the perpetual subordinated debt securities without any further action or direction on the part of such holder. |
Mergers and Similar Transactions
We are generally permitted to consolidate with or merge into another corporation or other entity. We are also permitted to convey, transfer or lease our properties and assets substantially as an entirety to another corporation or other entity. With regard to any series of perpetual subordinated debt securities, however, we may not take any of these actions unless all the following conditions are met:
| • | If the successor entity in the transaction is not Nomura Holdings, Inc., the successor entity must be organized and validly existing as a corporation, partnership or trust and must expressly assume our obligations under the perpetual subordinated debt securities of that series and the Perpetual Subordinated Debt Securities Indenture. The successor entity may be organized under the laws of any jurisdiction, whether in Japan, the United States or elsewhere. |
| • | Immediately after giving effect to the transaction, no Bankruptcy Event under the Perpetual Subordinated Debt Securities Indenture has occurred and is continuing. |
If the conditions described above are satisfied with respect to the perpetual subordinated debt securities of any series, we will not need to obtain the approval of the holders of those perpetual subordinated debt securities in order to merge or consolidate or to convey, transfer or lease our properties and assets. Also, these conditions will apply only if we wish to merge or consolidate with another entity or convey, transfer or lease our properties and assets substantially as an entirety to another entity. We will not need to satisfy these conditions if we enter into other types of transactions, including any transaction in which we acquire the stock or assets of another entity, any transaction that involves a change of control of Nomura Holdings, Inc., or any share-for-share exchange (kabushiki-kokan), share transfer (kabushiki-iten), partial share exchange (kabushiki-kofu) or corporate split (kaisha bunkatsu) pursuant to the Companies Act, but in which we do not merge or consolidate, and any transaction in which we convey, transfer or lease less than substantially all our properties and assets.
No Events of Default or Rights of Acceleration
Non-payment of principal of or interest on the perpetual subordinated debt securities (including additional amounts with respect thereto, if any) or breach of covenants in the Perpetual Subordinated Debt Securities Indenture or the perpetual subordinated debt securities or any other event shall not constitute an event of default or an event of acceleration under the Perpetual Subordinated Debt Securities Indenture or the perpetual subordinated debt securities or give rise to any right of the holders or the Perpetual Subordinated Debt Securities Trustee to declare the principal of or interest on the perpetual subordinated debt securities to be due and payable or accelerate any payment of such principal or interest, and there are no events of default or circumstances in respect of the perpetual subordinated debt securities that entitle the holders of perpetual subordinated debt securities or the Perpetual Subordinated Debt Securities Trustee to require that the perpetual subordinated debt securities become immediately due and payable.
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Upon the occurrence and continuation of a Liquidation Event, holders of the perpetual subordinated debt securities shall have a Liquidation Claim, payment of which is subject to the subordination provisions described under “—Subordination.” The only action the Perpetual Subordinated Debt Securities Trustee (acting on behalf of the holders) or the holders may practically take against us upon a Liquidation Event might be to file their Liquidation Claims in the liquidation proceeding with respect to us pursuant to the laws of Japan, subject to the subordination provisions described under “—Subordination.”
Pursuant to the Perpetual Subordinated Debt Securities Indenture, the Perpetual Subordinated Debt Securities Trustee shall give notice by mail to the holders of the perpetual subordinated debt securities of all events which could lead to a breach known to the Perpetual Subordinated Debt Securities Trustee that has occurred with respect to the perpetual subordinated debt securities, provided that, except in the case of nonpayment, the Perpetual Subordinated Debt Securities Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or trustees and/or responsible officers of the Perpetual Subordinated Debt Securities Trustee in good faith determines that the withholding of such notice is in the interests of the holders of such series of perpetual subordinated debt securities. The Perpetual Subordinated Debt Securities Trustee shall transmit the notice within 90 days of such occurrence, unless all events which could lead to a breach have been cured before transmission of such notice.
Under the Perpetual Subordinated Debt Securities Indenture, subject to the provisions as described above, unless otherwise set forth in the applicable prospectus supplement, a “breach” with respect to the perpetual subordinated debt securities of any series means each one of the following events which shall have occurred and be continuing:
| (i) | our failure to pay the principal, if, when and to the extent due, or, to pay the interest when due unless we determined to cancel such interest payment in respect of any series of the perpetual subordinated debt securities, and the continuance of any such failure for a period of 30 days after the date when due, unless we shall have cured such failure by payment within such period, |
| (ii) | our failure to duly perform or observe any other term, covenant or agreement contained in any of the perpetual subordinated debt securities of such series or in the Perpetual Subordinated Debt Securities Indenture in respect of the perpetual subordinated debt securities of such series for a period of 90 days after the date on which written notice of such failure, requiring us to remedy the same, shall have been given first to us (and to the Perpetual Subordinated Debt Securities Trustee in the case of notice by the holders referred to below) by the Perpetual Subordinated Debt Securities Trustee or holders of at least 25% in principal amount of the then outstanding perpetual subordinated securities of such series (such notification must specify the breach, demand that it be remedied and state that the notification is a “Notice of Breach” under the Perpetual Subordinated Debt Securities Indenture), or |
| (iii) | any other events or conditions that would constitute a breach as provided in any applicable supplemental indenture or in the perpetual subordinated indenture of such series. |
Compliance with Perpetual Subordinated Debt Securities Indenture
We will furnish to the Perpetual Subordinated Debt Securities Trustee every year a written statement certifying that to our knowledge we are in compliance with the Perpetual Subordinated Debt Securities Indenture and the perpetual subordinated debt securities issued under it, or else specifying any default under the Perpetual Subordinated Debt Securities Indenture.
Book-entry and other indirect owners should consult their banks or brokers for information on how to give notice or direction to or make a request of the Perpetual Subordinated Debt Securities Trustee. Book-entry and other indirect owners are described above under “—Book-Entry; Delivery and Form.”
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Limitation on Suits by You as an Individual Holder of Perpetual Subordinated Debt Securities
The Perpetual Subordinated Debt Securities Indenture provides that no individual holder of perpetual subordinated debt securities may institute any action against us under the Perpetual Subordinated Debt Securities Indenture, unless the following actions have occurred:
| (i) | the holder must have previously given written notice to the Perpetual Subordinated Debt Securities Trustee of the continuing breach; |
| (ii) | the holders of not less than 25% in aggregate principal amount of the outstanding perpetual subordinated debt securities of each affected series, with each such series treated as a single class, must have: |
| a. | made written request to the Perpetual Subordinated Debt Securities Trustee to institute that action; and |
| b. | offered the Perpetual Subordinated Debt Securities Trustee indemnity and/or security to its satisfaction; |
| (iii) | the Perpetual Subordinated Debt Securities Trustee must have failed to institute that action within 60 days after receipt of the request referred to in (ii) above; and |
| (iv) | the holders of a majority in principal amount of the outstanding perpetual subordinated debt securities of each affected series, voting as one class, must not have given written directions to the Perpetual Subordinated Debt Securities Trustee inconsistent with those of the holders referred to above. |
Notwithstanding any other provision in the Perpetual Subordinated Debt Securities Indenture and any provision of the perpetual subordinated debt securities, the right of any holder of any perpetual subordinated debt security to receive payment of the principal of and interest on such perpetual subordinated debt securities on or after the date on which it has become due and payable, or to institute suit for the enforcement of any such payment on or after such date, shall not be impaired or affected without the consent of such holder.
Notwithstanding the foregoing, by subscribing for, purchasing or otherwise acquiring the perpetual subordinated debt securities, holders of the perpetual subordinated debt securities agree to the limitations, suspension and waiver of rights triggered by an event triggering any Going Concern Write-Down, Write-Down and Cancellation, interest cancellation and subordination. For the avoidance of doubt, the foregoing shall not be construed to impair the effectiveness of the going concern, non-viability and bankruptcy write-down provisions, the interest cancellation provisions, the subordination provisions set forth in the Perpetual Subordinated Debt Securities Indenture or related provisions of the perpetual subordinated debt securities.
Further Issuances
We reserve the right, from time to time, without the consent of the holders of perpetual subordinated debt securities for any series, to issue additional perpetual subordinated debt securities of such series on terms and conditions identical to those of the perpetual subordinated debt securities of that series, which additional perpetual subordinated debt securities shall increase the aggregate principal amount of, and shall be consolidated and form a single series with, the perpetual subordinated debt securities of that series. We may also issue other securities under the Perpetual Subordinated Debt Securities Indenture as part of a separate series that have different terms from the perpetual subordinated debt securities.
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Discharge
Unless otherwise set forth in a supplemental indenture and disclosed in the applicable prospectus supplement, we may discharge all of our obligations, other than as to transfers and exchanges, under the Perpetual Subordinated Debt Securities Indenture after we have:
| (i) | redeemed all perpetual subordinated debt securities outstanding under the Perpetual Subordinated Debt Securities Indenture in accordance with the redemption provisions described in “—Repurchases Optional and Redemption;” |
| (ii) | delivered to the Perpetual Subordinated Debt Securities Trustee, the paying agent or registrar, as applicable, for cancellation all of the outstanding perpetual subordinated debt securities; or |
| (iii) | all securities of each series outstanding under the Perpetual Subordinated Debt Securities Indenture shall have been cancelled in connection with a write-down upon occurrence of a Non-Viability Event or Bankruptcy Event as provided in the Perpetual Subordinated Debt Securities Indenture. |
Modification of the Perpetual Subordinated Debt Securities Indenture and Waiver of Covenants
There are three types of changes we can make to the Perpetual Subordinated Debt Securities Indenture and the perpetual subordinated debt securities or series of perpetual subordinated debt securities issued under the Perpetual Subordinated Debt Securities Indenture.
Changes Requiring Holders’ Approval
First, there are changes that cannot be made without the approval of the holder of each perpetual subordinated debt security affected by the change under the Perpetual Subordinated Debt Securities Indenture except as otherwise required or permitted pursuant to the Going Concern Write-Down, Write-Down and Cancellation, interest payment cancellation or subordination provisions applicable to such series of perpetual subordinated debt securities. Here is a list of those types of changes:
| • | reduce the principal amount (other than upon the occurrence of a Capital Ratio Event, Non-Viability Event, Bankruptcy Event or Liquidation Event, as provided in the Perpetual Subordinated Debt Securities Indenture), the interest rate (other than upon the occurrence of a Capital Ratio Event, Non-Viability Event, Bankruptcy Event, Liquidation Event, or due to the cancellation of interest as provided in the Perpetual Subordinated Debt Securities Indenture) or the redemption price (other than upon the occurrence of a Capital Ratio Event, Non-Viability Event or Bankruptcy Event, Liquidation Event as provided in the Perpetual Subordinated Debt Securities Indenture) for a perpetual subordinated debt security; |
| • | permit redemption of a perpetual subordinated debt security if not previously permitted; |
| • | impair any right a holder may have to require repayment of its perpetual subordinated debt security; |
| • | impair any right that a holder of an indexed or any other perpetual subordinated debt security may have to convert the perpetual subordinated debt security for or into securities; |
| • | change the currency of any payment on a perpetual subordinated debt security; |
| • | change the place of payment on a perpetual subordinated debt security; |
| • | modify or amend any provisions relating to the agreement to subordinate and the terms of subordination of the perpetual subordinated debt securities of any particular series pursuant to the Perpetual Subordinated Debt Securities Indenture; |
| • | remove, amend or modify the going-concern, non-viability or bankruptcy write-down provisions or the cancellation of interest payment provisions in a manner not expressly permitted to be accomplished without obtaining consent of holders; |
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| • | impair a holder’s right to sue for payment of any amount due on its perpetual subordinated debt security; |
| • | reduce the percentage in principal amount of the perpetual subordinated debt securities of any one or more affected series, taken separately or together, as applicable, and whether comprising the same or different series or less than all of the perpetual subordinated debt securities of a series, the approval of whose holders is needed to change the Perpetual Subordinated Debt Securities Indenture or those perpetual subordinated debt securities; |
| • | reduce the percentage in principal amount of the perpetual subordinated debt securities of any one or more affected series, taken separately or together, as applicable, and whether comprising the same or different series or less than all of the perpetual subordinated debt securities of a series, the consent of whose holders is needed to waive our compliance with the Perpetual Subordinated Debt Securities Indenture or to waive defaults; and |
| • | change the provisions of the Perpetual Subordinated Debt Securities Indenture dealing with modification and waiver in any other respect, except to increase any required percentage referred to above or to add to the provisions that cannot be changed or waived without approval of the holder of each affected perpetual subordinated debt security. |
Changes Not Requiring Holders’ Approval
Changes to the Perpetual Subordinated Debt Securities Indenture that are limited to clarifications and changes that would not adversely affect any perpetual subordinated debt securities of any series in any material respect do not require the approval of the holders of the affected perpetual subordinated debt securities. Holders’ approval is similarly not necessary to make changes that affect only perpetual subordinated debt securities to be issued under the Perpetual Subordinated Debt Securities Indenture after the changes take effect.
We may also make changes or obtain waivers that do not adversely affect a particular perpetual subordinated debt security, even if they affect other perpetual subordinated debt securities. In those cases, we do not need to obtain the approval of the holder of the unaffected perpetual subordinated debt security; we need only obtain any required approvals from the holders of the affected perpetual subordinated debt securities.
In addition, we may make changes to the Perpetual Subordinated Debt Securities Indenture, without the consent of the holders of the perpetual subordinated debt securities issued under the Perpetual Subordinated Debt Securities Indenture, to:
| (i) | remove, amend or modify the going-concern, non-viability or bankruptcy write-down provisions or the cancellation of interest payment provisions; provided that such removal, amendment or modification does not adversely affect the interests of the holders of the perpetual subordinated debt securities in any material respect or the treatment of the perpetual subordinated debt securities as our Additional Tier 1 Capital; or |
| (ii) | effect any changes to the Perpetual Subordinated Debt Securities Indenture in a manner necessary to comply with the procedures of DTC, Euroclear or Clearstream or any applicable clearing system. |
Changes Requiring Majority Approval
Any other change to the Perpetual Subordinated Debt Securities Indenture and the perpetual subordinated debt securities issued thereunder would require the following approval:
| • | If the change affects only particular perpetual subordinated debt securities within a series, it must be approved by the holders of a majority in principal amount of such particular perpetual subordinated debt securities. |
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| • | If the change affects multiple perpetual subordinated debt securities of one or more series, it must be approved by the holders of a majority in principal amount of all perpetual subordinated debt securities affected by the change, with all such affected perpetual subordinated debt securities voting together as one class for this purpose (and by the holders of a majority in principal amount of any affected perpetual subordinated debt securities that by their terms are entitled to vote separately as described below). |
In each case, the required approval must be given by written consent.
The modification of terms with respect to certain securities of a series issued under the Perpetual Subordinated Debt Securities Indenture could be effectuated without obtaining the consent of the holders of a majority in principal amount of other securities of such series that are not affected by such modification.
The same majority approval would be required for us to obtain a waiver of any of our covenants in the Perpetual Subordinated Debt Securities Indenture. Our covenants include the promises we make about merging, which we describe above under “—Mergers and Similar Transactions.” If the holders approve a waiver of a covenant, we will not have to comply with it. The holders, however, cannot approve a waiver of any provision in a particular perpetual subordinated debt security, or in the Perpetual Subordinated Debt Securities Indenture as it affects that perpetual subordinated debt security, that we cannot change without the approval of the holder of that perpetual subordinated debt security as described above in “—Changes Requiring Holders’ Approval,” unless that holder approves the waiver.
Book-entry and other indirect owners should consult their banks or brokers for information on how approval may be granted or denied if we seek to change the Perpetual Subordinated Debt Securities Indenture or any perpetual subordinated debt securities or request a waiver.
Special Rules for Action by Holders
When holders take any action under the Perpetual Subordinated Debt Securities Indenture, such as approving any change or waiver or giving the Perpetual Subordinated Debt Securities Trustee an instruction, we will apply the following rules, except as may otherwise be provided in the applicable prospectus supplement.
Only Outstanding Perpetual Subordinated Debt Securities Are Eligible
Only holders of outstanding perpetual subordinated debt securities or the outstanding perpetual subordinated debt securities of the applicable series, as applicable, will be eligible to participate in any action by holders of such perpetual subordinated debt securities or the perpetual subordinated debt securities of that series. Also, we will count only outstanding perpetual subordinated debt securities in determining whether the various percentage requirements for taking action have been met. For these purposes, a perpetual subordinated debt security will not be “outstanding” if:
| • | it has been cancelled or surrendered for cancellation; |
| • | we have deposited or set aside, in trust for its holder, money for its payment or redemption; |
| • | it has been issued as a replacement for a mutilated, destroyed, lost or stolen perpetual subordinated debt security; or |
| • | we or one of our affiliates, such as Nomura Securities International, Inc., is the owner. |
Determining Record Dates for Action by Holders
We will generally be entitled to set any day as a record date for the purpose of determining the holders that are entitled to take action under the Perpetual Subordinated Debt Securities Indenture. In certain limited
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circumstances, only the Perpetual Subordinated Debt Securities Trustee will be entitled to set a record date for action by holders. If we or the Perpetual Subordinated Debt Securities Trustee set a record date for an approval or other action to be taken by holders, that vote or action may be taken only by persons or entities who are holders on the record date and must be taken during the period that we specify for this purpose, or that the Perpetual Subordinated Debt Securities Trustee specifies if it sets the record date. We or the Perpetual Subordinated Debt Securities Trustee, as applicable, may shorten or lengthen this period from time to time. This period, however, may not extend beyond the 180th day after the record date for the action. In addition, record dates for any global perpetual subordinated debt security may be set in accordance with procedures established by the depositary from time to time. Accordingly, record dates for global perpetual subordinated debt securities may differ from those for other perpetual subordinated debt securities.
Form, Exchange and Transfer of Perpetual Subordinated Debt Securities
If any perpetual subordinated debt securities cease to be issued in registered global form, they will be issued:
| • | only in fully registered form; |
| • | without interest coupons; and |
| • | unless we indicate otherwise in your prospectus supplement, in denominations of $2,000 and integral multiples of $1,000 in excess thereof. |
Holders may exchange their perpetual subordinated debt securities for perpetual subordinated debt securities of smaller denominations or combined into fewer perpetual subordinated debt securities of larger denominations, as long as the total principal amount is not changed. You may not exchange your perpetual subordinated debt securities for securities of a different series or having different terms, unless your prospectus supplement says you may.
Holders may exchange or transfer their perpetual subordinated debt securities at the office of the Perpetual Subordinated Debt Securities Trustee. They may also replace lost, stolen, destroyed or mutilated perpetual subordinated debt securities at that office. We have appointed the Perpetual Subordinated Debt Securities Trustee to act as our agent for registering perpetual subordinated debt securities in the names of holders and transferring and replacing perpetual subordinated debt securities. We may appoint another entity to perform these functions or perform them ourselves.
Holders will not be required to pay a service charge to transfer or exchange their perpetual subordinated debt securities, but they may be required to pay for any tax or other governmental charge associated with the exchange or transfer. The transfer or exchange, and any replacement, will be made only if our transfer agent is satisfied with the holder’s proof of legal ownership. The transfer agent may require an indemnity before replacing any perpetual subordinated debt securities.
If we have designated additional transfer agents for your perpetual subordinated debt security, they will be named in your prospectus supplement. We may appoint additional transfer agents or cancel the appointment of any particular transfer agent. We may also approve a change in the office through which any transfer agent acts.
If the perpetual subordinated debt securities of any series are redeemable and we redeem less than all of those perpetual subordinated debt securities, we may block the transfer or exchange of those perpetual subordinated debt securities during the period beginning 15 calendar days before the day we mail the notice of redemption and ending on the day of that mailing, in order to freeze the list of holders to prepare the mailing. We may also refuse to register transfers of or exchange any perpetual subordinated debt security selected for redemption.
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If a perpetual subordinated debt security is issued as a global perpetual subordinated debt security, only the depositary, DTC, Euroclear or Clearstream, as applicable, will be entitled to transfer and exchange the perpetual subordinated debt security as described in this subsection, since the depositary will be the sole holder of the perpetual subordinated debt security.
The rules for exchange described above apply to exchange of perpetual subordinated debt securities for other perpetual subordinated debt securities of the same series and kind. If a perpetual subordinated debt security is convertible, exercisable or exchangeable into or for a different kind of security, such as one that we have not issued, or for other property, the rules governing that type of conversion, exercise or exchange will be described in the applicable prospectus supplement.
Paying Agent, Transfer Agent, Registrar and Authenticating Agent
Citibank, N.A., London Branch, Corporate Trust Department, Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, United Kingdom, will initially act as paying agent, transfer agent, registrar and authenticating agent for the perpetual subordinated debt securities. We may change the paying agent, transfer agent, registrar or authenticating agent without prior notice to the holders of the perpetual subordinated debt securities, and we or any of our subsidiaries may act as paying agent, transfer agent, registrar or authenticating agent.
Unclaimed Payments
Regardless of who acts as paying agent, all money paid by us to a paying agent that remains unclaimed at the end of two years after the amount is due to a holder will be repaid to us. After that two-year period, the holder may look only to us for payment and not to the Perpetual Subordinated Debt Securities Trustee, any other paying agent or anyone else.
Notices
Notices to be given to holders of a global perpetual subordinated debt security will be given only to the depositary, in accordance with its applicable policies as in effect from time to time. Notices to be given to holders of perpetual subordinated debt securities not in global form will be sent by mail to the respective addresses of the holders as they appear in the Perpetual Subordinated Debt Securities Trustee’s records, and will be deemed given when mailed. Neither the failure to give any notice to a particular holder, nor any defect in a notice given to a particular holder, will affect the sufficiency of any notice given to another holder.
Book-entry and other indirect owners should consult their banks or brokers for information on how they will receive notices.
Concerning the Perpetual Subordinated Debt Securities Trustee
Citibank, N.A., whose offices are located at 388 Greenwich Street, New York, New York 10013, is initially serving as the Perpetual Subordinated Debt Securities Trustee for the perpetual subordinated debt securities. Under the Perpetual Subordinated Debt Securities Indenture, we are required to file with the Perpetual Subordinated Debt Securities Trustee any information, documents and other reports, or summaries thereof, as may be required under the Trust Indenture Act, at the times and in the manner provided under the Trust Indenture Act. However, in case of documents filed with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, any such filing with the Perpetual Subordinated Debt Securities Trustee need not be made until the 15th day after such filing is actually made with the SEC.
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Indemnification of the Perpetual Subordinated Debt Securities Trustee for Actions Taken on Your Behalf
The Perpetual Subordinated Debt Securities Indenture provides that we will indemnify the Perpetual Subordinated Debt Securities Trustee for, and hold it harmless against, any loss, claim, liability or expense incurred without willful misconduct, negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts under the Perpetual Subordinated Debt Securities Indenture, including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties under the Perpetual Subordinated Debt Securities Indenture. Subject to these provisions and specified other limitations, the holders of a majority in aggregate principal amount of each series of outstanding perpetual subordinated debt securities of each affected series, voting as one class, may direct the time, method and place of conducting any proceeding for any remedy available to the Perpetual Subordinated Debt Securities Trustee, or exercising any trust or power conferred on the Perpetual Subordinated Debt Securities Trustee.
Transfer and Exchange
A holder of the perpetual subordinated debt securities issued in definitive form may transfer or exchange perpetual subordinated debt securities in accordance with the Perpetual Subordinated Debt Securities Indenture. The registrar and the Perpetual Subordinated Debt Securities Trustee may require a holder of perpetual subordinated debt securities, among other things, to furnish appropriate endorsements and transfer documents, and to pay any taxes and fees required by law or permitted by the Perpetual Subordinated Debt Securities Indenture.
We will treat the registered holder of perpetual subordinated debt securities as the owner of that perpetual subordinated debt security for all purposes. See “—Book-Entry, Delivery and Form” above.
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PLAN OF DISTRIBUTION (CONFLICTS OF INTEREST)
General
We may sell debt securities:
| • | to or through underwriting syndicates represented by managing underwriters; |
| • | through one or more underwriters without a syndicate for them to offer and sell to the public; |
| • | through the issuance of subscription rights to our existing securityholders; |
| • | through dealers or agents; and |
| • | to investors directly in negotiated sales or in competitively bid transactions. |
Any underwriter or agent involved in the offer and sale of any series of the debt securities will be named in the prospectus supplement. Nomura Securities International, Inc., or other of our subsidiaries, may act as an underwriter or agent.
The prospectus supplement for each series of debt securities will describe:
| • | the terms of the offering of these debt securities, including the name or names of any agent or agents or the name or names of any underwriters; |
| • | the public offering or purchase price; |
| • | any discounts and commissions to be allowed or paid to any agents or underwriters and all other items constituting underwriting compensation; |
| • | any securities exchanges on which the debt securities may be listed; |
| • | any discounts and commissions to be allowed or paid to dealers; and |
| • | other specific terms of the particular offering or sale. |
If underwriters are used in the sale, we will execute an underwriting agreement with those underwriters relating to the debt securities that we will offer. Unless otherwise set forth in the prospectus supplement, the obligations of the underwriters to purchase these debt securities will be subject to conditions. The underwriters will be obligated to purchase all of these debt securities if any are purchased.
The debt securities subject to the underwriting agreement will be acquired by the underwriters for their own account and may be resold by them from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. Underwriters may be deemed to have received compensation from us in the form of underwriting discounts or commissions and may also receive commissions from the purchasers of these debt securities for whom they may act as agent. Underwriters may sell these debt securities to or through dealers. These dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agent. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time.
We also may sell the debt securities in connection with a remarketing upon their purchase, in connection with a redemption or repayment, by a remarketing firm acting as principal for its own account or as our agent. Remarketing firms may be deemed to be underwriters in connection with the debt securities that they remarket.
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We may authorize underwriters to solicit offers by institutions to purchase the debt securities subject to the underwriting agreement from us, at the public offering price stated in the prospectus supplement under delayed delivery contracts providing for payment and delivery on a specified date in the future. If we sell debt securities under these delayed delivery contracts, the prospectus supplement will state that as well as the conditions to which these delayed delivery contracts will be subject and the commissions payable for that solicitation.
In connection with underwritten offerings of the debt securities offered by this prospectus and in accordance with applicable law and industry practice, underwriters may over-allot or effect transactions that stabilize, maintain or otherwise affect the market price of the debt securities offered by this prospectus at levels above those that might otherwise prevail in the open market, including by entering stabilizing bids, effecting syndicate covering transactions or imposing penalty bids, each of which is described below.
| • | A stabilizing bid means the placing of any bid, or the effecting of any purchase, for the purpose of pegging, fixing or maintaining the price of a security. |
| • | A syndicate covering transaction means the placing of any bid on behalf of the underwriting syndicate or the effecting of any purchase to reduce a short position created in connection with the offering. |
| • | A penalty bid means an arrangement that permits the managing underwriter to reclaim a selling concession from a syndicate member in connection with the offering when offered debt securities originally sold by the syndicate member are purchased in syndicate covering transactions. |
These transactions may be effected on an exchange or automated quotation system, if the debt securities are listed on that exchange or admitted for trading on that automated quotation system, or in the over-the-counter market or otherwise. Underwriters are not required to engage in any of these activities or to continue these activities if commenced.
Debt securities may be sold directly by us to one or more institutional purchasers, or through agents designated by us from time to time, at a fixed price or prices, which may be changed, or at varying prices determined at the time of sale. Any agent involved in the offer or sale of the debt securities in respect of which this prospectus is delivered will be named, and any commissions payable by us to the agent will be set forth, in the prospectus supplement relating to that offering. Unless otherwise indicated in the applicable prospectus supplement, any agent will be acting on a best efforts basis for the period of its appointment.
Underwriters, dealers and agents may be entitled, under agreements with us, to indemnification by us relating to material misstatements or omissions. Underwriters, dealers and agents may be customers of, engage in transactions with, or perform services for, us and our subsidiaries or affiliates in the ordinary course of business.
Each series of debt securities offered by this prospectus will be a new issue of debt securities and will have no established trading market. Any underwriters to whom offered debt securities are sold for public offering and sale may make a market in the offered debt securities, but the underwriters will not be obligated to do so and may discontinue any market making at any time without notice. The debt securities offered by this prospectus may or may not be listed on a national securities exchange. No assurance can be given that there will be a market for any debt securities offered by this prospectus.
Market-Making Resales by Affiliates
This prospectus may be used by Nomura Securities International, Inc. in connection with offers and sales of the debt securities in market-making transactions. In a market-making transaction, Nomura Securities International, Inc. may resell a security it acquires from other holders, after the original offering and sale of the debt security. Resales of this kind may occur in the open market or may be privately negotiated, at prevailing market prices at the time of resale or at related or negotiated prices. In these transactions, Nomura Securities International, Inc. may act as principal or agent, including as agent for the counterparty in a transaction in which
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Nomura Securities International, Inc. acts as principal, or as agent for both counterparties in a transaction in which Nomura Securities International, Inc. does not act as principal. Nomura Securities International, Inc. may receive compensation in the form of discounts and commissions, including from both counterparties in some cases. Other of our affiliates may also engage in transactions of this kind and may use this prospectus for this purpose.
We do not expect to receive any proceeds from market-making transactions. We do not expect that Nomura Securities International, Inc. or any other affiliate that engages in these transactions will pay any proceeds from its market-making resales to us.
Information about the trade and settlement dates, as well as the purchase price, for a market-making transaction will be provided to the purchaser in a separate confirmation of sale. Unless we or an agent inform you in your confirmation of sale that your debt security is being purchased in its original offering and sale, you may assume that you are purchasing your debt security in a market-making transaction.
Conflicts of Interest
To the extent an initial offering of the debt securities will be distributed by one of our affiliates, each such offering of debt securities will be conducted in compliance with the requirements of Rule 5121 of FINRA, regarding a FINRA member firm’s distribution of securities of an affiliate and related conflicts of interest. No underwriter, selling agent or dealer utilized in the initial offering of debt securities who is one of our affiliates will confirm sales to accounts over which it exercises discretionary authority without the prior specific written approval of its customer.
Following the initial distribution of any of the debt securities, our affiliates may offer and sell these debt securities in the course of their businesses. Such affiliates may act as principals or agents in these transactions and may make any sales at varying prices related to prevailing market prices at the time of sale or otherwise. Such affiliates may also use this prospectus in connection with these transactions. None of our affiliates is obligated to make a market in any of these debt securities and may discontinue any market-making activities at any time without notice.
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BENEFIT PLAN INVESTOR CONSIDERATIONS
Certain material consequences under Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended, and Section 4975 of the Code, relating to the purchase and ownership of the debt securities offered by this prospectus will be set forth in the applicable prospectus supplement.
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WHERE YOU CAN FIND MORE INFORMATION
Available Information
We file annual reports and other information with the SEC. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at https://www.sec.gov. Our corporate website is https://www.nomura.com.
We have filed with the SEC a registration statement on Form F-3 relating to the securities covered by this prospectus. This prospectus is part of the registration statement and does not contain all the information in the registration statement. Whenever a reference is made in this prospectus to a contract or other document, please be aware that the reference is not necessarily complete and that you should refer to the exhibits that are part of the registration statement for a copy of the applicable contract or other document. You may review a copy of the registration statement through the SEC’s internet site noted above.
Incorporation of Documents by Reference
The SEC’s rules allow us to “incorporate by reference” the information we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus, and information that we file after the date of this prospectus with the SEC and which is incorporated by reference will automatically update and supersede the information contained in this prospectus or incorporated by reference in this prospectus.
We are incorporating by reference (i) our annual report on Form 20-F for the fiscal year ended March 31, 2024 filed with the SEC on June 26, 2024 and (ii) our current report on Form 6-K submitted to the SEC on November 19, 2024 (containing the English translation of our semi-annual securities report pursuant to the FIEA for the six months ended September 30, 2024, but excluding the English translation of the Interim Review Report of Independent Auditor); and (iii) our current report on Form 6-K submitted to the SEC on December 13, 2024 (containing our interim operating and financial review for the six months ended September 30, 2024).
All annual reports on Form 20-F filed with the SEC after the date of this prospectus will be incorporated by reference to this prospectus. In addition, our current reports on Form 6-K submitted to the SEC after the date of this prospectus (or portions thereof) will be incorporated by reference in this prospectus only to the extent that the reports expressly state that we incorporate them (or such portions) by reference in this prospectus.
Each person, including any beneficial owner, to whom this prospectus is delivered may request a copy of items incorporated by reference, at no cost, by writing or telephoning us at our principal executive offices at Nomura Holdings, Inc., 13-1, Nihonbashi 1-chome, Chuo-ku, Tokyo 103-8645, Japan; Telephone: 81-3-6746-7720; Attention: Treasury Department.
Except as described above, no other information is incorporated by reference in this prospectus, including, without limitation, information on our website.
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In connection with particular offerings of the securities in the future, and if stated in the applicable prospectus supplement, the validity of those securities may be passed upon for us by Sullivan & Cromwell LLP as to matters of New York law and by Anderson Mori & Tomotsune as to matters of Japanese law, and for any underwriters or agents by Simpson Thacher & Bartlett LLP or other counsel named in the applicable prospectus supplement.
Our consolidated financial statements appearing in our annual report on Form 20-F for the year ended March 31, 2024, and the effectiveness of our internal control over financial reporting as of March 31, 2024, have been audited by Ernst & Young ShinNihon LLC, independent registered public accounting firm, as set forth in their reports thereon, included therein, and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing within the meaning of the Securities Act.
With respect to our unaudited interim consolidated financial statements as of September 30, 2024 and for the six-month periods ended September 30, 2023 and 2024 included in our current report on Form 6-K submitted to the SEC on December 13, 2024 and incorporated by reference in this prospectus, Ernst & Young ShinNihon LLC reported that they have applied limited procedures in accordance with professional standards for a review of such financial statements. However, their separate report dated December 13, 2024, included in our current report on Form 6-K submitted to the SEC on December 13, 2024, and incorporated by reference herein, states that they did not audit and they do not express an opinion on the interim consolidated financial statements. Accordingly, the degree of reliance on their report on such financial statements should be restricted in light of the limited nature of the review procedures applied. Ernst & Young ShinNihon LLC is not subject to the liability provisions of Section 11 of the Securities Act for their report on the unaudited interim consolidated financial statements because that report is not a “report” or a “part” of the Registration Statement prepared or certified by Ernst & Young ShinNihon LLC within the meaning of Sections 7 and 11 of the Securities Act.
ENFORCEMENT OF CIVIL LIABILITIES
We are a joint stock corporation incorporated with limited liability under the laws of Japan. Most of our directors and executive officers are residents of countries other than the United States. Although some of our affiliates have substantial assets in the United States, substantially all of our assets and the assets of our directors and executive officers (and certain experts named herein) are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon us or our directors and executive officers or to enforce against us or these persons judgments obtained in the United States courts predicated upon the civil liability provisions of the United States securities laws. We have been advised by our Japanese counsel, Anderson Mori & Tomotsune, that there is doubt as to the enforceability in Japan, in original actions or in actions to enforce judgments of United States courts, of civil liabilities based solely on United States securities laws.
Our agent for service of process is Nomura Holding America Inc. (or any successor corporation).
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
| Item 8. | Indemnification of Directors and Officers |
Article 330 and Article 402, paragraph 3 of the Companies Act make the provisions of Section 10, Chapter 2, Book III of the Civil Code of Japan (“the Civil Code”), applicable to the relationship between Nomura and its directors and executive officers, respectively. Section 10 of the Civil Code, among other things, provides in effect that:
(1) Any director or executive officer of a company may demand advance payment of expenses which are considered necessary for the management of the affairs of such company entrusted to him or her;
(2) If a director or an executive officer of a company has defrayed any expenses which are considered necessary for the management of the affairs of such company entrusted to him or her, he or she may demand reimbursement therefor and interest thereon after the date of payment from such company;
(3) If a director or an executive officer has assumed an obligation necessary for the management of the affairs of a company entrusted to him or her, he or she may require such company to perform it in his or her place or, if it is not due, to furnish adequate security; and
(4) If a director or an executive officer, without any fault on his or her part, sustains damage through the management of the affairs of a company entrusted to him or her, he or she may demand compensation therefor from such company.
In accordance with Article 427, Paragraph 1 of the Companies Act and Nomura’s Articles of Incorporation, Nomura has entered into an agreement with each of its directors who does not serve as an executive director (other than the chairman of the board of directors) that limits such director’s liabilities to Nomura for damages suffered by Nomura if such director acted in good faith and without gross negligence. Liability under each such agreement is limited to either ¥20 million or the amounts prescribed by applicable laws and regulations, whichever is greater. Such limitation is generally enforceable as between Nomura and such directors under Japanese law. Such agreements may not be available for certain violations of U.S. federal securities law and may be determined by courts of the United States to be unenforceable in such circumstances.
Further, pursuant to Article 426, paragraph 1 of the Companies Act and our Articles of Incorporation, Nomura may, by a resolution adopted by Nomura’s board of directors, release the liabilities of any directors or executive officers to Nomura for damages suffered by Nomura due to acts of such directors or executive officers taken in good faith and without gross negligence, to the extent permitted by the Companies Act and Nomura’s Articles of Incorporation.
Nomura anticipates that any underwriting agreements and distribution agreements it will enter into in connection with the issuance of its securities will provide for indemnification of Nomura and its controlling persons against certain liabilities under the Securities Act.
Nomura has in place a directors and officers liability insurance policy, which indemnifies its directors and officers against liability arising from certain acts performed or omission thereof in their respective capacities.
| Item 9. | Exhibits |
The exhibits to this registration statement are listed in the Exhibit Index below.
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| Item 10. | Undertakings |
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Filing Fee Tables” in the effective registration statement;
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
provided, however, that the undertakings set forth in paragraphs (i), (ii) and (iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Securities Act of 1933 need not be furnished, provided, that the Registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Securities Act of 1933 or Item 8.A of Form 20-F if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement.
(5) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
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(ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of the registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in the registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(6) That, for the purpose of determining liability of the Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
(7) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(8) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
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EXHIBIT INDEX
| * | To be filed, if necessary, by amendment or as an exhibit to a report filed or submitted pursuant to Section 13(a) or 15(d) of the Exchange Act and incorporated by reference herein. |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form F-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Tokyo, Japan, on December 19, 2024.
| NOMURA HOLDINGS, INC. | ||
| (Registrant) | ||
| By: |
/s/ KENTARO OKUDA | |
| Name: |
Kentaro Okuda | |
| Title: |
Director, Representative Executive Officer, President and Group CEO | |
Pursuant to the requirement of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons on behalf of Registrant and in the capacities indicated as of December 19, 2024.
We, the undersigned directors and officers of the Registrant, do hereby severally constitute and appoint Takumi Kitamura, Executive Officer, Chief Financial Officer and Chief Transformation Officer of the Registrant, Yuko Horiuchi, Senior Managing Director of the Registrant, (with full power to each of them to act alone) as our true and lawful attorneys and agents with full power of substitution and resubstitution, to do any and all acts and things in our name and on our behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents or any of them may deem necessary or advisable to enable the Registrant to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with the registration statement of the Registrant on Form F-3, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto; and we do each hereby ratify and confirm all that said attorneys and agents or any of them, or their or his substitute or substitutes, shall do or cause to be done by virtue hereof.
| Signature |
Title | |
| /s/ KOJI NAGAI Koji Nagai |
Director and Chairman of the Board of Directors | |
| /s/ KENTARO OKUDA Kentaro Okuda |
Director, Representative Executive Officer, President and Group CEO (Principal Executive Officer) | |
| /s/ YUTAKA NAKAJIMA Yutaka Nakajima |
Director, Representative Executive Officer and Deputy President | |
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| Signature |
Title | |
| /s/ SHOJI OGAWA Shoji Ogawa |
Director | |
| /s/ LAURA SIMONE UNGER Laura Simone Unger |
Director | |
| /s/ VICTOR CHU Victor Chu |
Director | |
| /s/ J. CHRISTOPHER GIANCARLO J. Christopher Giancarlo |
Director | |
| /s/ PATRICIA MOSSER Patricia Mosser |
Director | |
| /s/ TAKAHISA TAKAHARA Takahisa Takahara |
Director | |
| /s/ MIYUKI ISHIGURO Miyuki Ishiguro |
Director | |
| /s/ MASAHIRO ISHIZUKA Masahiro Ishizuka |
Director | |
| /s/ TAKU OSHIMA Taku Oshima |
Director | |
| /s/ TAKUMI KITAMURA Takumi Kitamura |
Executive Officer, Chief Financial Officer and Chief Transformation Officer (Principal Financial Officer and Principal Accounting Officer) | |
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Authorized Representative in the United States:
| By: | /s/ SATOSHI KAWAMURA | |
| Name: | Satoshi Kawamura | |
| Title: | CEO and President, Nomura Holdings America Inc. |
as the duly authorized representative of Nomura Holdings, Inc. in the United States
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Exhibit 1.1
NOMURA HOLDINGS, INC.
(a joint stock corporation organized under the laws of Japan)
FORM OF UNDERWRITING AGREEMENT
[ ], 20[ ]
[Name of Representative[s]]
as Representative[s] of the several Underwriters
Ladies and Gentlemen:
Nomura Holdings, Inc., a joint stock corporation incorporated with limited liability organized under the laws of Japan (the “Company”), confirms its agreement with each of the Underwriters named in Schedule A hereto (collectively, the “Underwriters,” which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for whom [insert name of Representative[s]] [is/are] acting as representative[s] (in such capacity, the “Representative[s]”), with respect to the issue and sale by the Company and the purchase by the Underwriters outside Japan, acting severally and not jointly, of the respective principal amounts set forth in said Schedule A of [insert description of the securities] ([insert name of securities], [and together with the [insert name(s) of securities]] the “Securities”). The Securities are to be issued pursuant to a [senior debt indenture dated as of January 16, 2020]/[subordinated indenture to be dated on or about [date]] (the “Indenture”) between the Company and Citibank, N.A., as trustee (the “Trustee”). The Securities will be issued in book-entry form in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). The Company has entered into an agency appointment agreement with Citibank, N.A., London Branch, as paying agent, transfer agent and registrar, and the Trustee with respect to the Securities (the “Agency Appointment Agreement”). [The Company will also enter into a calculation agency agreement with Citibank, N.A., London Branch, as calculation agent (the “Calculation Agency Agreement”).] The term “Indenture” as used herein includes any Officer’s Certificate (as defined in the Indenture) delivered, and any Board Resolution (as defined in the Indenture) adopted, in each case pursuant to Section 2.03 of the Indenture, to establish the form and terms of the Securities. The Company understands that the Underwriters propose to make a public offering of the Securities outside Japan as soon as the Representative[s] deem[s] advisable after this Agreement has been executed and delivered.
The Company has filed with the U.S. Securities and Exchange Commission (the “Commission”) an automatic shelf registration statement on Form F-3 (No. 333-[ ]), including the related preliminary prospectus, [and a post-effective amendment thereto, each of] which became effective upon filing with the Commission under Rule 462(e) (“Rule 462(e)”) of the rules and regulations of the Commission (the “1933 Act Regulations”) under the Securities Act of 1933, as amended (the “1933 Act”). Such registration statement covers the registration of the Securities under the 1933 Act. Promptly after execution and delivery of this Agreement, the Company will prepare and file a prospectus supplement in accordance with the provisions of Rule 424(b) (“Rule 424(b)”) of the 1933 Act Regulations. Any information included in such prospectus supplement that was omitted from such registration statement at the time it became effective but that is deemed to be part of and included in such registration statement pursuant to Rule 430A, Rule 430B or Rule 430C under the 1933 Act is referred to as “Rule 430 Information.” Each prospectus used in connection with the offering of the Securities that omitted Rule 430 Information is herein called a “preliminary prospectus.” Such registration statement, at any given time, including the amendments thereto to at such time, the exhibits (excluding the Statement of Eligibility on Form T-1 (“Form T-1”) under the Trust Indenture Act of 1939, as amended (the “1939 Act”)), and any schedules thereto at such time, the documents incorporated by reference therein pursuant to Item 6 of Form F-3 under the 1933 Act at such time and the documents otherwise deemed to be a part thereof or included therein by the 1933 Act Regulations, is herein called the “Registration Statement.” The Registration Statement at the time it originally became effective is herein called the “Original Registration Statement.” The final prospectus in the form first furnished to the Underwriters for use or made available upon request of purchasers pursuant to Rule 173 under the 1933 Act in connection with the offering of the Securities, including the documents incorporated by reference therein pursuant to Item 6 of Form F-3 under the 1933 Act at the time of the execution
of this Agreement and any preliminary prospectuses (in each case including any amendments or supplements to any such preliminary prospectuses) that form a part thereof, is herein called the “Prospectus.”
For purposes of this Agreement, all references to the Registration Statement, any preliminary prospectus, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copies filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”).
All references in this Agreement to financial statements and schedules and other information which is “contained,” “included” or “stated” in the Registration Statement, any preliminary prospectus or the Prospectus (or other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is incorporated by reference in or otherwise deemed by the 1933 Act Regulations to be a part of or included in the Registration Statement, such preliminary prospectus or the Prospectus, as the case may be; and all references in this Agreement to amendments or supplements to the Registration Statement, any preliminary prospectus or the Prospectus shall be deemed to mean and include the filing of any document, including any annual reports on Form 20-F, under the Securities Exchange Act of 1934, as amended (the “1934 Act”), which is incorporated by reference in or otherwise deemed by the 1933 Act Regulations to be a part of or included in the Registration Statement, such preliminary prospectus or the Prospectus, as the case may be.
[The Company acknowledges and agrees that the Representative[s] may use the Prospectus in connection with secondary market offers and sales of the Securities as contemplated in the Prospectus under the caption “Underwriting (Conflicts of Interest)” (“Secondary Market Transactions”). The Company further acknowledges and agrees that the Representative[s] is under no obligation to effect any Secondary Market Transactions and, if it does so, it may discontinue effecting such transactions at any time without providing any notice to the Company.]
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents and warrants to each Underwriter as of the date hereof, the Applicable Time referred to in Section 1(a)(ii) hereof and the Closing Time referred to in Section 2(b) hereof and agrees with each Underwriter, as follows:
(i) Status as a Well-Known Seasoned Issuer. (A) At the time of filing the Original Registration Statement, (B) at the time of the most recent amendment thereto for the purposes of complying with Section 10(a)(3) of the 1933 Act (whether such amendment was by post-effective amendment, incorporated report filed pursuant to Section 13 or 15(d) of the 1934 Act or form of prospectus), (C) at the time the Company or any person acting on its behalf (for the purposes of this clause, within the meaning of Rule 163(c) of the 1933 Act Regulations (“Rule 163(c)”)) made any offer relating to the Securities in reliance on the exemption of Rule 163 of the 1933 Act Regulations (“Rule 163”) and (D) at the date hereof, the Company was and is a “well-known seasoned issuer” as defined in Rule 405 of the 1933 Act Regulations (“Rule 405”). The Registration Statement is an “automatic shelf registration statement,” as defined in Rule 405, and the Securities, since their registration on the Registration Statement, have been and remain eligible for registration by the Company on a Rule 405 “automatic shelf registration statement.” The Company has not received from the Commission any notice pursuant to Rule 401(g)(2) of the 1933 Act Regulations (“Rule 401(g)(2)”) objecting to the use of the automatic shelf registration statement form.
At the time of filing the Original Registration Statement, at the earliest time thereafter that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the 1933 Act Regulations) of the Securities and at the date hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405.
(ii) Registration Statement, Prospectus and Disclosure at Time of Sale. The Original Registration Statement became effective upon filing under Rule 462(e) on [ ], 20[ ], and any post-effective
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amendment thereto also became effective upon filing under Rule 462(e). No stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated by the Commission, and any request on the part of the Commission for additional information in connection with the Registration Statement has been complied with.
Any offer that is a written communication relating to the Securities made prior to the filing of the Original Registration Statement by the Company or any person acting on its behalf (for the purposes of this paragraph, within the meaning of Rule 163(c)) has been filed with the Commission in accordance with the exemption provided by Rule 163 and otherwise complied with the requirements of Rule 163, including without limitation the legending requirement, to qualify such offer for the exemption from Section 5(c) of the 1933 Act provided by Rule 163.
At the respective times that the Original Registration Statement and each amendment thereto became effective, and at each deemed effective date with respect to the Underwriters pursuant to Rule 430B(f)(2) of the 1933 Act Regulations and at the Closing Time, the Registration Statement complied and will comply in all material respects with the requirements of the 1933 Act, the 1933 Act Regulations, the 1939 Act and the rules and regulations of the Commission under the 1939 Act (the “1939 Act Regulations”), and did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to (A) any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by any Underwriter through the Representative[s] expressly for use therein or (B) the Form T-1.
Neither the Prospectus nor any amendments or supplements thereto, at the time the Prospectus or any such amendment or supplement was filed with the Commission and at the Closing Time, included or will include an untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by any Underwriter through the Representative[s] expressly for use therein.
The Prospectus (including the prospectus or prospectuses filed with the Commission as part of the Original Registration Statement or as part of any amendment thereto) complied when filed with the Commission in all material respects with the 1933 Act Regulations and each preliminary prospectus and the Prospectus delivered to the Underwriters for use in connection with this offering was or will be (as the case may be) identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
As of the Applicable Time (as defined below), neither (A) the Issuer General Use Free Writing Prospectus(es) (as defined below) issued as of or prior to the Applicable Time and the Statutory Prospectus (as defined below), all considered together (collectively, the “General Disclosure Package”), nor (B) any individual Issuer Limited Use Free Writing Prospectus (as defined below) [or any pre-offering communication listed as such in Schedule B hereto (a “Pre-Offering Communication”)], when considered together with the General Disclosure Package, included any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by any Underwriter through the Representative[s] expressly for use therein.
As of the time of the filing of the Final Term Sheet[s] (as defined in Section 3(c) hereof), the General Disclosure Package will not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
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As used in this subsection and elsewhere in this Agreement:
“Applicable Time” means [ ] [a.m./p.m.] (New York City time) on [ ], 20[ ] or such other time as agreed by the Company and the Representative[s].
“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433 of the 1933 Act Regulations (“Rule 433”), relating to the Securities that (A) is required to be filed with the Commission by the Company, (B) is a “road show that is a written communication” within the meaning of Rule 433(d)(8)(i), whether or not required to be filed with the Commission, or (C) is exempt from filing pursuant to Rule 433(d)(5)(i) because it contains a description of the Securities or of the offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g).
“Issuer General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors, as evidenced by its being specified as such in Schedule B hereto.
“Issuer Limited Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is not an Issuer General Use Free Writing Prospectus.
“Statutory Prospectus” as of any time means the prospectus relating to the Securities that is included in the Registration Statement immediately prior to that time, including any document incorporated by reference therein and any preliminary or other prospectus deemed to be a part thereof.
Each Issuer Free Writing Prospectus [or Pre-Offering Communication], as of its issue date and at all subsequent times through the completion of the public offer and sale of the Securities or until any earlier date that the Company notified or notifies the Representative[s] as described in Section 3(f) hereof, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement or the Prospectus, including any document incorporated by reference therein, and any preliminary or other prospectus deemed to be a part thereof that has not been superseded or modified.
(iii) Incorporated Documents. The documents incorporated or deemed to be incorporated by reference in the Registration Statement and the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission thereunder (the “1934 Act Regulations”), and, when read together with the other information in the General Disclosure Package and the Prospectus, (A) at the time the Original Registration Statement became effective, (B) at the earlier of the time the Prospectus was first used by the Underwriters and the date and time of the first contract of sale of the Securities in this offering and (C) at the Closing Time, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by any Underwriter through the Representative[s] expressly for use therein.
(iv) Independent Accountants. Ernst & Young ShinNihon LLC (“E&Y”), the accountants who audited the consolidated annual financial statements (together with the related notes) of the Company prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), included in the Registration Statement, the General Disclosure Package and the Prospectus, are (A) an independent registered public accounting firm with respect to the Company within the meaning of the 1933 Act, the 1933 Act Regulations and the applicable rules and regulations adopted thereunder by the Public Company Accounting Oversight Board and (B) independent auditors with respect to the Company under Article 193-2, Section 1 of the Financial Instruments and Exchange Act of Japan (the “FIEA”), the Certified Public Accountants Law of Japan and the applicable rules and regulations thereunder.
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(v) Financial Statements. The consolidated annual financial statements, together with the related notes, of the Company included in the Registration Statement, the General Disclosure Package and the Prospectus present fairly the financial position of the Company and its consolidated subsidiaries at the dates indicated and the statements of operations, changes in shareholders’ equity, comprehensive income and cash flows of the Company and its consolidated subsidiaries for the periods specified; and said financial statements have been prepared in conformity with U.S. GAAP applied on a consistent basis throughout the periods involved.
The selected financial data and the summary financial information included in the Prospectus present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included in the Registration Statement, except as described therein. All other financial information included in the Registration Statement, the General Disclosure Package and the Prospectus has been derived from the accounting records of the Company and its subsidiaries and presents fairly the information shown thereby. All disclosures contained in the Registration Statement, the General Disclosure Package or the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply with Regulation G under the 1934 Act and Item 10 of Regulation S-K of the 1933 Act Regulations, to the extent applicable.
(vi) No Material Adverse Change in Business. Since the respective dates as of which information is disclosed in the Registration Statement, the General Disclosure Package or the Prospectus, except as otherwise stated therein, (A) there has been no material adverse change (nor any development or event involving a prospective material adverse change of which the Company is aware) in or affecting the condition (financial or otherwise), business, prospects, results of operations or general affairs of the Company and its subsidiaries taken as a whole, whether or not arising in the ordinary course of business (a “Material Adverse Effect”), (B) there have been no transactions entered into by the Company or any of its subsidiaries which are material with respect to the Company and its subsidiaries taken as a whole, (C) there has been no change in the long-term debt of the Company and its subsidiaries, and (D) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock.
(vii) Incorporation of the Company. The Company has been duly organized and is validly existing as a joint stock corporation incorporated with limited liability under the laws of Japan and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into and perform its obligations under this Agreement, the Indenture[, /and ]the Agency Appointment Agreement [and the Calculation Agency Agreement]; no steps have been made for the winding up of the Company under the laws of Japan; and the Company is not required to be qualified as a foreign corporation in any foreign jurisdiction, whether by reason of the ownership or leasing of property, the conduct of business or otherwise, except where the failure so to qualify would not result in a Material Adverse Effect.
(viii) Incorporation of Subsidiaries. Each of the Company’s Significant Subsidiaries (as defined below) has been duly incorporated or organized, is validly existing as a corporation and, where such concept is applicable, is in good standing under the laws of the jurisdiction of its incorporation or organization, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect; except as otherwise disclosed in the Prospectus, all of the issued and outstanding capital stock of each such Significant Subsidiary owned by the Company, directly or through subsidiaries, has been duly authorized and validly issued, is fully paid and non-assessable and is owned free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the outstanding shares of capital stock of any Significant Subsidiary owned by the Company, directly or through subsidiaries, was issued in violation of the preemptive or other similar rights of any securityholder of such Significant Subsidiary. As used herein, the term “Significant Subsidiaries” means the entities which are comprised of each “significant subsidiary,” as such term is defined in Rule 1-02(w) of Regulation S-X.
(ix) Capitalization of the Company. The authorized, issued and outstanding capital stock of the Company is as set forth in the Prospectus under the caption “Capitalization and Indebtedness” (except for subsequent
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issuances, if any, pursuant to the exercise of convertible securities or options referred to in the Prospectus). The shares of issued and outstanding capital stock of the Company (A) have been duly authorized and validly issued, are fully paid and non-assessable, rank pari passu among themselves in all respects, (B) were not issued in violation of the preemptive or other similar rights of any securityholder of the Company and (C) are listed and admitted to trading on the Tokyo Stock Exchange and the Nagoya Stock Exchange.
(x) Authorization of Agreement. This Agreement has been duly authorized, executed and delivered by the Company and will constitute a legal, valid and binding agreement of the Company, enforceable against it in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).
(xi) Authorization of the Indenture[, /and ]the Agency Appointment Agreement [and the Calculation Agency Agreement]. The Indenture has been duly qualified under the 1939 Act and each of the Indenture[, /and ]the Agency Appointment Agreement[ and the Calculation Agency Agreement] [has/have] been duly authorized by the Company and constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).
(xii) Authorization of the Securities. The Securities have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and, at the Closing Time, will have been duly executed by the Company and, when authenticated, issued and delivered in the manner provided for in the Indenture and delivered against payment of the purchase price therefor as provided in this Agreement, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), and will be in the form contemplated by, and entitled to the benefits of, the Indenture.
(xiii) Description of the Securities and the Indenture. The Securities and the Indenture will conform in all material respects to the respective statements relating thereto contained in the General Disclosure Package and the Prospectus and will be in substantially the respective forms filed or incorporated by reference, as the case may be, as exhibits to the Registration Statement.
(xiv) Withholding Tax. Except as described in the Registration Statement and the Prospectus, payments made by the Company to the holders of the Securities who are non-resident individuals or non-Japanese corporations (within the meaning given by Japanese tax laws), having no permanent establishment in Japan, will not be subject to any withholdings or similar charges for or on account of taxation under the current laws of Japan or any political subdivision of Japan.
(xv) Transfer Taxes. No stamp, issue, registration, documentary or transfer tax or duty or other similar tax or duty (collectively, “Transfer Taxes”) and no capital gains, income or withholding tax or other tax is payable by or on behalf of the Underwriters to any Japanese taxing or other Japanese governmental authority in connection with (A) the creation, issuance, sale or delivery by the Company of the Securities to the Underwriters in the manner contemplated by this Agreement, or (B) assuming that each of the Underwriters is a non-Japanese corporation having no permanent establishment in Japan for Japanese tax purposes, (i) the sale by the Underwriters of the Securities in the manner contemplated by this Agreement and the Prospectus, (ii) the execution, delivery or performance outside Japan of this Agreement or (iii) the execution, delivery or performance outside Japan of the Indenture or the consummation of any of the transactions contemplated therein.
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(xvi) Absence of Defaults and Conflicts. Except as disclosed in the Registration Statement, (A) neither the Company nor any of its Significant Subsidiaries is in violation of its Articles of Incorporation, Regulations of the Board of Directors, Regulations of the Executive Management Board, Share Handling Regulations or similar organizational documents, (B) neither the Company nor any of its subsidiaries is in violation of any law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, Japanese or foreign, having jurisdiction over the Company or any subsidiary or any of their respective assets, properties or operations, or (C) neither the Company nor any of its subsidiaries is in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any subsidiary is subject (collectively, “Agreements and Instruments”) except, in the case of clause (B) or (C) above, for such violations or defaults that would not, singly or in the aggregate, result in a Material Adverse Effect; and the execution, delivery and performance of this Agreement, the Indenture and the Securities and the consummation of the transactions contemplated herein and therein and in the Registration Statement (including the issuance and sale of the Securities and the use of the proceeds from the sale of the Securities as described in the Prospectus under the caption “Use of Proceeds”) and compliance by the Company with its obligations under this Agreement, the Indenture and the Securities have been duly authorized by all necessary corporate action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any subsidiary pursuant to, the Agreements and Instruments (except for such conflicts, breaches, defaults or Repayment Events or liens, charges or encumbrances that would not result in a Material Adverse Effect), nor will such action result in any violation of the provisions of the Articles of Incorporation, Regulations of the Board of Directors, Regulations of the Executive Management Board, Share Handling Regulations or similar organizational documents of the Company or any subsidiary or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, Japanese or foreign, having jurisdiction over the Company or any subsidiary or any of their respective assets, properties or operations or of any Agreements and Instruments. As used herein, a “Repayment Event” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any subsidiary.
(xvii) Absence of Labor Dispute. No labor dispute with employees of the Company or any of its subsidiaries exists or, to the best knowledge of the Company, is threatened, pending or contemplated which would, if determined adversely to the Company or the relevant subsidiary (as applicable), singly or in the aggregate, result in a Material Adverse Effect.
(xviii) Absence of Proceedings. Except as disclosed in the Registration Statement, there is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body or third party, Japanese or foreign, now pending, or, to the best knowledge of the Company, threatened, against or affecting the Company or any of its subsidiaries, which might reasonably be expected to result in a Material Adverse Effect, or which might materially and adversely affect the properties or assets thereof or the consummation of the transactions contemplated in this Agreement or the Indenture or the performance by the Company of its obligations hereunder or thereunder; the aggregate of all pending legal or governmental proceedings to which the Company and its subsidiaries are a party or of which any of their respective property or assets is the subject which are not described in the Registration Statement, including ordinary routine litigation incidental to the business, would not, singly or in the aggregate, if determined adversely to the Company and its subsidiaries, result in a Material Adverse Effect.
(xix) Enforceability in Japan. Each of this Agreement, the Indenture and the Securities is in proper form under the laws of Japan to be enforced against the Company, and to ensure the legality, validity, enforceability or admissibility into evidence in Japan of this Agreement, the Indenture or the Securities, as
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the case may be, it is not necessary that this Agreement, the Indenture or the Securities or any other documents be filed or recorded with any court or other authority in Japan or that any Japanese stamp or similar tax be paid by the Underwriters or purchasers therefrom on or in respect of this Agreement, the Indenture, the Agency Appointment Agreement[, the Calculation Agency Agreement] or the Securities or any other document to be furnished hereunder or thereunder.
(xx) Possession of Intellectual Property. The Company and its subsidiaries own or possess, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, “Intellectual Property”) necessary to carry on the business now operated by them, except where the failure to own or possess would not, singly or in the aggregate, result in a Material Adverse Effect, and neither the Company nor any of its subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the aggregate, would result in a Material Adverse Effect.
(xxi) Accuracy of Exhibits. There are no contracts or documents which are required to be described in the Registration Statement, the Prospectus or the documents incorporated by reference therein or to be filed as exhibits thereto which have not been so described and filed as required.
(xxii) Description of Taxation. The statements set forth in the Prospectus under the caption “Taxation,” insofar as they purport to describe the provisions of the laws and regulations of Japan and the United States, as the case may be, or legal conclusions with respect thereto, fairly summarize such provisions or conclusions and are accurate in all material respects.
(xxiii) Absence of Manipulation. None of the Company, any of its affiliates, as such term is defined in Rule 501(b) of Regulation D under the 1933 Act (each, an “Affiliate”), or any person acting on behalf of any of them has taken or will take, directly or indirectly, any action which is designed to cause or result in, or which has constituted or which might reasonably be expected to cause or result in, stabilization in violation of applicable laws or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities.
(xxiv) Absence of Further Requirements. No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency, Japanese or foreign, is necessary or required for the performance by the Company of its obligations hereunder, in connection with the offering, issuance or sale of the Securities hereunder or the consummation of the transactions contemplated hereunder and under the Indenture or for the due execution, delivery or performance of the Indenture by the Company, except (A) such as have already been obtained and are in full force and effect, (B) such as may be required under the 1933 Act or the 1933 Act Regulations or securities laws of any state of the United States or under the laws of any jurisdiction outside Japan and the United States, and (C) qualification of the Indenture under the 1939 Act.
(xxv) Possession of Licenses and Permits. The Company and its subsidiaries possess such permits, licenses, approvals, consents and other authorizations (collectively, “Governmental Licenses”) issued by the appropriate Japanese national or local or any foreign regulatory agencies or bodies necessary to conduct the business now operated by them, except where the failure so to possess would not, singly or in the aggregate, result in a Material Adverse Effect; the Company and its subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, singly or in the aggregate, result in a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except when the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not, singly or in the aggregate, result in a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received any notice of
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proceedings relating to the revocation or modification of any such Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect.
(xxvi) Title to Property. The Company and its subsidiaries have good and marketable title to all real property owned by the Company and its subsidiaries and good title to all other properties owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except such as (A) are described in the Registration Statement or (B) do not, singly or in the aggregate, result in a Material Adverse Effect; and all of the leases and subleases material to the business of the Company and its subsidiaries, taken as a whole, and under which the Company or any of its subsidiaries holds properties described in the Registration Statement, are in full force and effect, and neither the Company nor any subsidiary has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease, except where the failure of the lease or sublease to be in full force and effect or such claim could not, singly or in the aggregate, result in a Material Adverse Effect.
(xxvii) Investment Company Act. The Company is not required, and upon the issuance and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the Prospectus will not be required, to register under, or seek an exemption from, the Investment Company Act of 1940, as amended.
(xxviii) Accounting Controls and Disclosure Controls. The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation by the Company of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such financial statements and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences, all within the meaning of Section 13(b)(2) of the 1934 Act. Since the date of the last respective audited consolidated financial statements of the Company (contained in the Annual Report on Form 20-F of the Company filed with the Commission on [ ]), there has been (i) no material weakness or significant deficiency, each as defined in Auditing Standard No. 2201, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements” of the Public Company Accounting Oversight Board in the Company’s internal control over financial reporting (whether or not remediated) and (ii) no adverse change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
The Company and each of its consolidated subsidiaries maintain disclosure controls and procedures as defined in Rule 13a-15(e) under the 1934 Act. The Company and its consolidated subsidiaries employ disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act and the FIEA is recorded, processed, summarized and reported, within the time periods specified in the rules and regulations under the 1934 Act, the FIEA and the rules and forms of the Commission, as the case may be, and is accumulated and communicated to the Company’s management, including its principal executive officer or officers and principal financial officer or officers, as appropriate, to allow timely decisions regarding disclosure. The Company has carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 of the 1934 Act.
(xxix) Payment of Taxes. There are no pending investigations by any tax authorities, Japanese or foreign, relating to the Company or any of its subsidiaries which would, if determined adversely to the Company or the relevant subsidiary (as applicable), singly or in the aggregate, result in a Material Adverse
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Effect. All Japanese income tax returns of the Company and its subsidiaries required by law to be filed have been filed and all taxes shown by such returns or otherwise required to be paid, have been paid, except assessments against which appeals have been or will be promptly taken and as to which adequate reserves have been provided, and except for the failure to file returns or to pay taxes that would not result in a Material Adverse Effect. The Japanese income tax returns of the Company and its subsidiaries through the fiscal year ended March 31, [ ] have been settled and no assessment in connection therewith has been made, or could reasonably be expected to be made, against the Company and its subsidiaries, except where the failure to settle the returns or the making of the assessment would not result in a Material Adverse Effect. The Company and its subsidiaries have filed all other tax returns that are required to have been filed by them pursuant to applicable Japanese, foreign or other law, except insofar as the failure to file such returns would not result in a Material Adverse Effect, and have paid all taxes due pursuant to such returns or otherwise required to be paid, except for such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided and except insofar as the failure to pay such taxes would not result in a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its subsidiaries, in respect of any income and corporation tax liability of the Company and its subsidiaries for any years not finally determined, are adequate to meet any assessments or re-assessments for additional income tax for any years not finally determined, except to the extent of any inadequacy that would not result in a Material Adverse Effect.
(xxx) Statistical and Market-Related Data. Any statistical and market-related data included in the Registration Statement are based on or derived from sources that the Company reasonably believes to be reliable and accurate in all material respects.
(xxxi) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor any director or officer, nor, to the knowledge of the Company, any employee, agent, Affiliate, representative or other person associated with or acting on behalf of the Company or any of its subsidiaries has, directly or indirectly, (A) used any corporate funds for any contribution, payment, gift, entertainment or other expense relating to political activity in violation of any applicable statute, rule or regulation of any jurisdiction in which the Company or any of its subsidiaries operates and to which it is subject, (B) made any direct or indirect payment or benefit to any foreign or domestic government or regulatory official or employee, including of any government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office from corporate funds in violation of any applicable statute, rule or regulation of any jurisdiction in which the Company or any such subsidiary operates and to which it is subject, (C) violated or is in violation of any provision of any applicable anti-bribery or anti-corruption laws (including, without limitation, the Foreign Corrupt Practices Act of 1977, as amended, and the Bribery Act 2010 of the United Kingdom) (collectively, “Anti-Bribery Laws”), or (D) made any unlawful bribe or other unlawful benefit, including, without limitation, any rebate, payoff, influence payment, kickback or other unlawful payment or benefit. The Company and its subsidiaries have instituted, maintain and enforce policies and procedures designed to promote and ensure compliance with, and which are reasonably expected to continue to promote and ensure compliance with, applicable Anti-Bribery Laws by the Company and its subsidiaries and by persons associated therewith.
(xxxii) Anti-Money Laundering Laws. The operations of the Company and its subsidiaries are and have been conducted at all times in compliance in all material respects with the financial recordkeeping and reporting requirements of anti-money-laundering laws, the anti-money laundering statutes of each jurisdiction in which the Company or its subsidiaries operate, the rules and regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”), in each case, as is applicable to the relevant entity respectively, and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the best knowledge of the Company, threatened that could reasonably be expected to result in a Material Adverse Effect, or that could reasonably be expected to
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materially and adversely affect the consummation of the transactions contemplated by, or the ability of the Company to perform its obligations under, this Agreement, the Securities or the Indenture.
(xxxiii) Sanctions. None of the Company, any subsidiary of the Company or any of their respective directors, officers or, to the knowledge of the Company, any employee or Affiliate of the Company or any of its subsidiaries is a person or entity with whom transactions are currently prohibited under any sanctions, including, without limitation, sanctions administered or enforced by the Office of Foreign Assets Control of the U.S. Treasury Department, the U.S. Department of State, the United Nations Security Council, the European Union, His Majesty’s Treasury or other relevant sanctions authority (collectively, “Sanctions”), nor is the Company or any of its subsidiaries located, organized or resident in a country or territory that is the subject or the target of Sanctions (each, a “Sanctioned Country”); and the Company and its subsidiaries will not, directly or indirectly, use the proceeds from the offering of the Securities, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing or facilitating any activities of or business with any subsidiary, joint venture partner, or other person or entity currently subject to any Sanctions or in any Sanctioned Country, or in any other manner that will result in a violation by any person (including any person participating in the transaction, whether as initial purchaser, advisor, investor or otherwise) of Sanctions.
(xxxiv) Compliance with the Sarbanes-Oxley Act. There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply in all material respects with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, including, without limitation, Section 402 thereof related to loans and Sections 302 and 906 thereof related to certifications.
(xxxv) Maintenance of IT Systems. The Company’s and its subsidiaries’ information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications and databases (collectively, “IT Systems”) are commercially adequate for, and operate and perform in all material respects as required in connection with the operation of the business of the Company and its subsidiaries as currently conducted, free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants. The Company and its subsidiaries have implemented and maintained commercially reasonable controls, policies, procedures and safeguards to maintain and protect their material confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and data (including all personal, personally identifiable, sensitive, confidential or regulated data) (“Personal Data”) used in connection with their businesses, and, to the knowledge of the Company, there have been no breaches, violations, outages or unauthorized uses of or accesses to the same, nor any incidents under internal review or investigations relating to the same, except, in each case, for those that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and its subsidiaries are presently in material compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Personal Data.
(xxxvi) Anti-social Forces. The Company is not or does not intend to be involved in supporting or operating any “anti-social forces” (as defined under the regulation of Japan Securities Dealers Association) (the “Anti-social Forces”) such as, but not limited to, organized crime groups (bouryokudan), through financing or otherwise. The Company does not have or does not intend to have, directly or indirectly, financial or capital association with any Anti-social Forces. The Company does not have a person belonging to the Anti-social Forces and serving as an officer of the Company. The Company is not aware of any facts that the Company employs such person as an employee, and the Company does not intend to appoint or employ such person as an officer or an employee of the Company. Further, the Company is not aware of any facts or circumstances where its management has been materially influenced by the Anti-social Forces, either directly or indirectly.
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(xxxvii) Pending Proceedings and Examinations. The Registration Statement is not the subject of a pending proceeding or examination under Section 8(d) or 8(e) of the 1933 Act, and the Company is not the subject of a pending proceeding under Section 8A of the 1933 Act in connection with the offering of the Securities.
(xxxviii) Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the 1933 Act and Section 21E of the 1934 Act) contained in the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
(xxxix) Receivership / Winding-up. No receiver or liquidator (or similar person) has been appointed in respect of the Company or any Significant Subsidiary or in respect of any part of the assets of the Company or any Significant Subsidiary; no resolution, order of any court, regulatory or governmental body or otherwise, or petition or application for an order has been passed, made or presented for the winding up of the Company or any Significant Subsidiary or for the protection of them from their creditors; and neither the Company nor any Significant Subsidiary is otherwise insolvent.
(xl) [Listing of the Securities. [Application has been made for the listing of the Securities on [insert name of the relevant securities exchange]]. / [The Company has obtained [approval-in-principle] for the Securities to be listed on [insert name of the relevant securities exchange], and such [approval-in-principle] has not been revoked.]]
(b) Officer’s Certificates. Any certificate signed by any officer of the Company or any of its subsidiaries delivered to the Representative[s] or to counsel for the Underwriters in connection with the transactions contemplated hereby shall be deemed a representation and warranty by the Company to each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Securities. On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company agrees to issue and sell to each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from the Company, at the price of $[ ] for the [insert name of securities], the aggregate principal amount of the [insert name of securities] set forth in Schedule A opposite the name of such Underwriter, plus any additional principal amount of Securities which such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Payment. Payment of the purchase price for, and delivery of certificates for, the Securities shall be made at [ ] [a.m./p.m.] (New York City time) on [ ], 20[ ] (unless postponed in accordance with the provisions of Section 10), or such other time not later than [ ] Business Days (as defined below) after such date as shall be agreed upon by the Representative[s] and the Company (such time and date of payment and delivery being herein called the “Closing Time”). “Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that is a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in New York City and Tokyo.
Payment of the purchase price for the Securities shall be made to the Company by wire transfer of immediately available funds to a bank account designated by the Company against delivery to the Representative[s], for the respective accounts of the Underwriters, of the Securities to be purchased by them. It is understood that each Underwriter has authorized the Representative[s], for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Securities which such Underwriter has agreed to purchase. The Representative[s], individually and not as representative[s] of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Securities to be purchased by any Underwriter whose funds have not been received by the Closing Time, but such payment shall not relieve such Underwriter from its obligations hereunder.
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(c) Transfer Taxes. The Company will bear and pay any Transfer Taxes, including any interest and penalties, on the creation, issuance and sale of the Securities and their initial resale to subsequent purchasers (the “Subsequent Purchasers”) in accordance with the terms of this Agreement and on the execution and delivery of this Agreement and any value-added tax payable in connection with the expense reimbursement payable by the Company pursuant to this Agreement.
(d) Denominations; Registration. The Securities to be purchased by each Underwriter hereunder will be represented by one or more global Securities in book-entry form which will be deposited by or on behalf of the Company with DTC. Certificates representing the Securities shall be issued in the name of Cede & Co., as nominee of DTC, delivered to the Trustee as custodian, and issued in denominations of $[200,000] and integral multiples of $1,000 in excess thereof. The documents to be delivered at the Closing Time by or on behalf of the parties hereto, including the cross-receipt for the Securities and the certificates representing the Securities, will be made available for examination by the Representative[s] at the offices of Simpson Thacher & Bartlett LLP, Ark Hills Sengokuyama Mori Tower, 9-10, Roppongi 1-chome, Minato-ku, Tokyo 106-0032, Japan (the “Closing Location”). A [virtual] meeting will be held at the Closing Location on the Business Day prior to the Closing Time, at which meeting the final drafts of the documents to delivered pursuant to Section 5 hereof will be available for review by the parties hereto.
(e) Japanese Selling Restrictions. The Underwriters agree that the Securities have not been and will not be registered under the FIEA and will be subject to the Act on Special Measures Concerning Taxation of Japan, as amended (the “Special Taxation Measures Act”). Accordingly, each of the Underwriters has represented and agreed that (i) it has not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell any Securities in Japan or to, or for the benefit of, any resident of Japan (which term as used in this item (i) means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEA and any other applicable laws, regulations and governmental guidelines of Japan; and (ii) it has not, directly or indirectly, offered or sold and will not, as part of its distribution under this Agreement at any time, directly or indirectly offer or sell the Securities to, or for the benefit of, any person other than a beneficial owner that is, (A) for Japanese tax purposes, neither (x) an individual resident of Japan or a Japanese corporation, nor (y) an individual non-resident of Japan or a non-Japanese corporation that in either case is a person having a special relationship with the Company as described in Article 6, paragraph 4 of the Special Taxation Measures Act (such person is hereinafter referred to as a “specially-related person of the Company”) (excluding an Underwriter designated in Article 6, paragraph 12, item 1 of the Special Taxation Measures Act which purchases unsubscribed portions of the Securities from the other Underwriters) or (B) a Japanese financial institution, designated in Article 3-2-2, paragraph 29 of the Order for Enforcement of the Act on Special Measures Concerning Taxation of Japan (Cabinet Order No. 43 of 1957, as amended).
Prior to the finalization of the allocations of the Securities to the Subsequent Purchasers, the Company will identify and inform the Representative[s] of all specially-related persons of the Company from the list compiled by the Underwriters of potential Subsequent Purchasers that may purchase any of the Securities from the Underwriters as part of the initial distribution of the Securities under this Agreement.
SECTION 3. Covenants. The Company covenants with each Underwriter as follows:
(a) Automatic Shelf Registration Statement. If, at any time during the period when a prospectus is required by the 1933 Act to be delivered in connection with the distribution of the Securities, the Registration Statement shall cease to comply with the requirements of the 1933 Act with respect to eligibility for the use of Form F-3, on which the Registration Statement was filed with the Commission, the Registration Statement shall cease to be an “automatic shelf registration statement” (as defined in Rule 405) or the Company shall have received a notice from the Commission pursuant to Rule 401(g)(2), the Company will (i) promptly notify the Representative[s], (ii) promptly file with the Commission a new registration statement under the 1933 Act
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relating to the Securities or a post-effective amendment to the Registration Statement, which new registration statement or post-effective amendment shall comply with the requirements of the 1933 Act and shall be in a form satisfactory to the Representative[s], (iii) use its best efforts to cause such new registration statement or post-effective amendment to become effective under the 1933 Act as soon as practicable, (iv) promptly notify the Representative[s] of such effectiveness and (v) take all other action necessary or appropriate to permit the distribution of the Securities to continue as contemplated in the Prospectus; all references herein to the Registration Statement shall be deemed to include each such new registration statement or post-effective amendment, if any.
(b) Compliance with Securities Regulations and Commission Requests; Payment of Filing Fees. The Company, subject to Section 3(c) hereof, will comply with the requirements of Rule 430A, 430B or 430C and will notify the Representative[s] immediately, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement, or any new registration statement relating to the Securities, shall become effective, or any supplement to the Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt of any comments from the Commission relating to the Registration Statement, including any document incorporated by reference therein or otherwise deemed to be a part thereof, (iii) of any request by the Commission for any amendment to the Registration Statement, or the filing of a new registration statement, or any amendment or supplement to the Prospectus or any document incorporated by reference therein or otherwise deemed to be a part thereof or for additional information, in each case in connection with the Securities, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, or such new registration statement, or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes or of any examination pursuant to Section 8(e) of the 1933 Act concerning the Registration Statement and (v) if the Company becomes the subject of a proceeding under Section 8A of the 1933 Act in connection with the offering of the Securities. The Company will effect the filings required under Rule 424(b) in connection with the offering of the Securities, in the manner and within the time period required by Rule 424(b) (without reliance on Rule 424(b)(8)), and will take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) in connection with the offering of the Securities was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus. The Company will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. The Company shall pay the required Commission filing fees relating to the Securities within the time required by Rule 456(b)(1)(i) of the 1933 Act Regulations without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r) of the 1933 Act Regulations (including, if applicable, by updating the “Calculation of Registration Fee” table in accordance with Rule 456(b)(1)(ii) either in a post-effective amendment to the Registration Statement or on the cover page of a prospectus filed pursuant to Rule 424(b)).
(c) Filing of Amendments and 1934 Act Documents; Preparation of Final Term Sheet[s]. Between the date hereof and the later of (i) the Closing Time and (ii) the completion of the distribution of the Securities, as promptly notified by the Representative[s] to the Company, the Company will give the Representative[s] notice of its intention to file or prepare any amendment to the Registration Statement or any new registration statement relating to the Securities or any amendment, supplement or revision to either any preliminary prospectus (including any prospectus included in the Registration Statement at the time it became effective) or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, and the Company will furnish the Representative[s] with copies of any such documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such document to which the Representative[s] or counsel for the Underwriters shall reasonably object. The Company has given the Representative[s] notice of any filings made pursuant to the 1934 Act or 1934 Act Regulations within 48 hours prior to the Applicable Time; the Company will give the Representative[s] notice of its intention to make any such filing from the Applicable Time to the Closing Time and will furnish the Representative[s] with copies of any such documents a reasonable amount of time prior to such proposed filing, as the case may be, and will not file or use any such document to
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which the Representative[s] or counsel for the Underwriters shall reasonably object. The Company will prepare [a ]final term sheet[s] (the “Final Term Sheet[s]”) reflecting the final terms of the Securities, in form and substance satisfactory to the Representative[s], and shall file such Final Term Sheet[s] as [an ]“issuer free writing prospectus[es]” pursuant to Rule 433 prior to the close of business two business days after the date hereof; provided that the Company shall furnish the Representative[s] with copies of any such Final Term Sheet a reasonable amount of time prior to such proposed filing and will not use or file any such document to which the Representative[s] or counsel to the Underwriters shall reasonably object.
(d) Delivery of Registration Statements. The Company has furnished or will deliver to the Representative[s] and counsel for the Underwriters, without charge, signed copies of the Original Registration Statement and of any amendment to the Original Registration Statement (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein or otherwise deemed to be a part thereof) and signed copies of all consents and certificates of experts, and will also deliver to the Representative[s], without charge, a conformed copy of the Original Registration Statement, and of each amendment thereto (without exhibits) for each of the Underwriters. The copies of the Original Registration Statement and any amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(e) Delivery of Prospectuses. The Company has delivered to each Underwriter, without charge, as many copies of each preliminary prospectus as such Underwriter reasonably requested, and the Company hereby consents to the use of such copies for purposes permitted by the 1933 Act. The Company will furnish to each Underwriter, without charge, during the period when the Prospectus is required to be delivered under the 1933 Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(f) Continued Compliance with Securities Laws.
(I) The Company will comply with the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations and the 1939 Act and the 1939 Act Regulations so as to permit the completion of the distribution of the Securities as contemplated in this Agreement and in the Prospectus. If at any time when a prospectus is required by the 1933 Act to be delivered in connection with the distribution of the Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Company, to amend the Registration Statement or amend or supplement the Prospectus in order that the Prospectus will not include any untrue statements of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the opinion of such counsel, at any such time to amend the Registration Statement or to file a new registration statement or amend or supplement the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and file with the Commission, subject to Section 3(b) hereof, such amendment, supplement or new registration statement as may be necessary to correct such statement or omission or to comply with such requirements, the Company will use its best efforts to have such amendment, supplement or new registration statement declared effective as soon as practicable (if it is not an automatic shelf registration statement with respect to the Securities), and the Company will furnish to the Underwriters such number of copies of such amendment, supplement or new registration statement as the Underwriters may reasonably request. If at any time following issuance of an Issuer Free Writing Prospectus [or a Pre-Offering Communication] there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus [or Pre-Offering Communication] conflicted or would conflict with the information contained in the Registration Statement (or any other registration statement relating to the Securities), the Statutory Prospectus or any preliminary prospectus relating to the Securities (including
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any document incorporated by reference therein) or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, the Company will promptly notify the Representative[s] and will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus [or Pre-Offering Communication] to eliminate or correct such conflict, untrue statement or omission[, provided that, in the case of an amendment or supplement to a Pre-Offering Communication, no such amendment or supplement of a Pre-Offering Communication must be delivered to any party not participating in the offering of the Securities].
(II) [During the period beginning on the date of the Prospectus and continuing for as long as delivery of the Prospectus may be required under applicable law, in the reasonable judgment of the Representative[s], after consultation with the Company, in order to offer and sell any Securities in Secondary Market Transactions (the “Secondary Transactions Period”), the Company shall update, supplement or amend the Prospectus, through documents subsequently filed by the Company with the Commission pursuant to the 1934 Act that are incorporated by reference therein or otherwise, so that the Prospectus, as updated, amended or supplemented, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The foregoing sentence notwithstanding, the Company may elect, upon notice to the Representative[s], not to comply with this Section 3(f)(II), but only for such period or periods that the Company reasonably determines are necessary, whether (a) to enable the completion of required English-language financial statements and related disclosures following the end of each fiscal year or quarter, as the case may be, or other material English-language disclosures or (b) for any other reason that the Company recognizes as being material to Secondary Market Transactions; provided, that no such period or periods shall exceed 90 days in the aggregate during any period of 12 consecutive calendar months; and, provided, further, that the Company shall promptly notify the Representative[s] if, for any reason, it believes that the preparation and filing of the English-language disclosures contemplated in the preceding clause (a) will be materially delayed. Upon receipt of any notice of such election as described in the foregoing sentence, the Representative[s] shall cease using the Prospectus or any amendment or supplement thereto in connection with Secondary Market Transactions until it receives notice from the Company that it may resume using such document (or such document as it may be amended or supplemented).]
(g) Blue Sky Qualifications. The Company will use its best efforts, in cooperation with the Underwriters, to qualify the Securities for offering and sale under the applicable securities laws of such states and other jurisdictions as the Representative[s] may designate and to maintain such qualifications in effect for a period of not less than one year from the date hereof [(or, in the case of the Representative[s] in connection with any Secondary Market Transactions, for the duration of the Secondary Transactions Period)]; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. The Company will also supply the Underwriters with such information as is necessary for the determination of the legality of the Securities for investment under the laws of such jurisdictions as the Underwriters may reasonably request.
(h) Rule 158. The Company will timely file such reports pursuant to the 1934 Act as are necessary in order to make generally available to its securityholders as soon as practicable an earnings statement for the purposes of, and to provide to the Underwriters the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(i) Use of Proceeds. The Company will use the net proceeds received by it from the sale of the Securities in the manner specified in the Prospectus under “Use of Proceeds.”
(j) Listing of the Securities. The Company will use its best efforts to have the Securities approved for listing on the [insert name of the relevant securities exchange] by the Closing Time or as soon as practicable
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thereafter and will use its reasonable best efforts to maintain such listing while any of the Securities remain outstanding; provided, however, that in the event that the Company’s obligations in connection with maintaining such listing become unduly burdensome, the Company may decide to delist the Securities from the [insert name of the relevant securities exchange] and seek an alternative listing for the Securities on another stock exchange.
(k) Restriction on Sale of Securities. During a period beginning the date of this Agreement and ending the date of the Closing Time, the Company will not, without the prior written consent of the Representative[s], directly or indirectly, issue, sell, offer or contract to sell, grant any option for the sale of, or otherwise transfer or dispose of, any other U.S. dollar-denominated [senior] / [subordinated] debt securities of the Company with a maturity greater than one year or any securities that are convertible into, or exchangeable for, the Securities or such other U.S. dollar-denominated [senior] / [subordinated] debt securities.
(l) Reporting Requirements. The Company, during the period when the Prospectus is required to be delivered under the 1933 Act, will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act Regulations.
(m) Issuer Free Writing Prospectuses. The Company represents and agrees that, unless it obtains the prior consent of the Representative[s], and each Underwriter represents and agrees that, unless it obtains the prior consent of the Company and the Representative[s], (A) it has not made and will not make any offer relating to the Securities that would constitute an “issuer free writing prospectus,” as defined in Rule 433, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with the Commission and (B) it has not made and will not make any offer relating to the Securities using a written communication not required to be filed with the Commission in reliance on the exemption of Rule 163B under the 1933 Act; provided, however, that prior to the preparation of the Final Term Sheet[s] in accordance with Section 3(c), the Underwriters are authorized to use the information with respect to the preliminary and final terms of the Securities in communications conveying information relating to the offering to investors. Any such free writing prospectus consented to by the Company and the Representative[s] is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company represents that it has treated or agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely filing with the Commission where required, legending and record keeping.
(n) Ratings. The Company shall take all reasonable action necessary to enable [insert name(s) of rating agency/agencies] to provide their respective credit ratings of the Securities.
(o) DTC. The Company will cooperate with the Representative[s] and use its best efforts to permit the Securities to be eligible for clearance and settlement through the facilities of DTC.
(p) No Stabilization. None of the Company, any of its Affiliates or any person acting on any of their behalf will take, directly or indirectly, any action designed to cause or to result in, or that will constitute or which might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company or any of its subsidiaries to facilitate the sale or resale of the Securities.
(q) Public Announcements. The Company agrees that (i) between the date hereof and the date of the Closing Time (both dates inclusive), it will not, and will cause its subsidiaries and all other parties acting on its or their behalf not to, without prior consultation with the Representative[s], issue any announcements in Japan or elsewhere which could reasonably be expected to have a material effect on the offering of the Securities or contradict any information contained in the Prospectus, except for any announcement that is required to be made by the Company or its subsidiaries in accordance with applicable law or in accordance with the rules of any applicable stock exchange after providing notice thereof to the Representative[s], (ii) between the date hereof and the date of the Closing Time (both dates inclusive), it will, and will cause its subsidiaries and all other parties acting on its or their behalf to, notify the Representative[s], if practicable, prior to and in any event
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simultaneously with the issue of any announcement concerning the offering of the Securities which could have a material adverse effect on the price of the Securities or contradict any information contained in the Prospectus and (iii) between the date immediately following the date of the Closing Time and the date three months following the date of the Closing Time (both dates inclusive), it will, and will cause its subsidiaries and all other parties acting on its or their behalf to, notify the Representative[s], if practicable, prior to and in any event simultaneously with the issue of any announcement concerning the offering of the Securities that could have a material adverse effect on the price of the Securities or contradict any information contained in the Prospectus.
(r) Notice to the Minister of Finance. Following the sale and delivery of the Securities under this Agreement, the Company will submit in a timely manner the reports required to be submitted to the Minister of Finance of Japan through the Bank of Japan under the Foreign Exchange and Foreign Trade Law of Japan.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement and the Indenture, including (i) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits) as originally filed and any amendment thereto, (ii) the preparation, printing and delivery to the Underwriters of this Agreement, any Agreement among Underwriters, the Indenture and such other documents as may be required in connection with the offering, purchase, sale, issuance or delivery of the Securities, (iii) the preparation, issuance and delivery of certificates representing the Securities to the Underwriters, including any Transfer Taxes and any stamp or other similar duties payable upon the issuance, sale or delivery of the Securities to the Underwriters and any charges of clearing agencies in connection therewith, (iv) the fees and disbursements of counsel, accountants and other advisors or agents (including transfer agents or registrars) to the Company, (v) the printing and delivery to the Underwriters of copies of each preliminary prospectus, any Permitted Free Writing Prospectus and of the Prospectus and any amendments or supplements thereto, and any costs associated with electronic delivery of any of the foregoing by the Underwriters to investors, (vi) the qualification of the Securities under securities laws in accordance with the provisions of Section 3(g) hereof, including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith and in connection with investigations into the necessity of filings pursuant to rules or regulations of the Financial Industry Regulatory Authority, and filing fees and the fees and disbursements of counsel for the Underwriters in connection with the preparation of the Blue Sky Survey and any supplement thereto, (vii) the preparation, printing and delivery to the Underwriters of copies of the Blue Sky Survey and any supplement thereto, (viii) all costs of advertising and legal notices, (ix) the fees and expenses of the Trustee, including the fees and disbursements of counsel for the Trustee in connection with the Indenture, the Agency Appointment Agreement[, the Calculation Agency Agreement] and the Securities, (x) any fees payable in connection with the ratings of the Securities, (xi) any fees and expenses of the Authorized Agent (as defined in Section 13 hereof), [(xii) the fees and expenses incurred in connection with the listing of the Securities on the [insert name of the relevant securities exchange] (including the fees and expenses of [insert name of applicable jurisdiction] legal counsel),] (xiii) the costs and expenses of the Company relating to investor presentations arranged by the Company on any “road show” undertaken in connection with the marketing of the Securities, including without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations, travel and lodging expenses of the representatives and officers of the Company and any such consultants, and the cost of aircraft and other transportation chartered in connection with the road show presentations, (xv) the costs and expenses (including without limitation any damages or other amounts payable in connection with legal or contractual liability) associated with the reforming of any contracts for sale of the Securities made by the Underwriters caused by a breach of the representation contained in the sixth paragraph of Section 1(a)(ii) hereof, and (xvi) all other costs and expenses incident to the performance of the Company’s obligations hereunder which are not otherwise specifically provided for in this section.
(b) Termination of Agreement. If this Agreement is terminated by the Representative[s] in accordance with the provisions of Section 5 or Section 9(a) hereof, the Company shall reimburse the Underwriters for all of their out-of-pocket expenses incurred, including the fees and disbursements of counsel for the Underwriters.
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SECTION 5. Conditions of Underwriters’ Obligations. The obligations of the several Underwriters hereunder are subject to the accuracy of the representations and warranties of the Company contained in Section 1 hereof or in certificates of any officer of the Company or any subsidiary of the Company delivered pursuant to the provisions hereof, to the performance by the Company of its covenants and other obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement; Filing of Prospectus; Payment of Filing Fee. The Registration Statement has become effective and at the Closing Time no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission, and any request on the part of the Commission for additional information shall have been complied with to the reasonable satisfaction of counsel to the Underwriters. A prospectus containing the Rule 430 Information shall have been filed with the Commission in the manner and within the time period required by Rule 424(b) without reliance on Rule 424(b)(8) (or a post-effective amendment providing such information shall have been filed and become effective in accordance with the requirements of Rule 430B). The Company shall have paid the required Commission filing fees relating to the Securities within the time period required by Rule 456(b)(1)(i) of the 1933 Act Regulations without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r) of the 1933 Act Regulations and, if applicable, shall have updated the “Calculation of Registration Fee” table in accordance with Rule 456(b)(1)(ii) either in a post-effective amendment to the Registration Statement or on the cover page of a prospectus filed pursuant to Rule 424(b).
(b) Opinions and Letters of Counsel for Company. At the Closing Time, the Representative[s] shall have received the opinions and letters, each dated as of the Closing Time, of (i) Sullivan & Cromwell, LLP, United States counsel for the Company, and (ii) Anderson Mori & Tomotsune, Japanese counsel for the Company, each in form and substance reasonably satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such opinions and letters for each of the other Underwriters to the effect set forth in Exhibits A and B hereto, respectively, and to such further effect as counsel to the Underwriters may reasonably request.
(c) Opinion and Letter of Counsel for Underwriters. At the Closing Time, the Representative[s] shall have received an opinion and a letter, each dated as of the Closing Time, of Simpson Thacher & Bartlett LLP, United States counsel for the Underwriters, together with signed or reproduced copies of such opinion and letter for each of the other Underwriters. Such counsel may state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and its subsidiaries and certificates of public officials.
(d) Officer’s Certificate. At the Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the Prospectus or the General Disclosure Package, any material adverse change (nor any development or event involving a prospective material adverse change of which the Company is aware) in or affecting the condition (financial or otherwise), business, prospects, results of operations or general affairs of the Company and its subsidiaries taken as a whole, whether or not arising in the ordinary course of business, and the Representative[s] shall have received a certificate signed by an authorized officer of the Company, dated as of the Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties in Section 1(a) hereof are true and correct with the same force and effect as though expressly made at and as of the Closing Time, (iii) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or, to his or her knowledge, contemplated by the Commission.
(e) Certificate of Chief Financial Officer. At the time of the execution of this Agreement and at the Closing Time, the Representative[s] shall have received a certificate of the chief financial officer of the Company, dated as of the date of this Agreement and as of the date of the Closing Time, respectively, in form and substance satisfactory to the Underwriters with respect to certain financial information contained in the Prospectus.
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(f) Accountant’s Comfort Letter. At the time of the execution of this Agreement, the Representative[s] shall have received from E&Y a letter dated such date, in form and substance satisfactory to the Representative[s], together with signed or reproduced copies of such letter for each of the other Underwriters containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus.
(g) Bring-down Comfort Letter. At the Closing Time, the Representative[s] shall have received from E&Y a letter, dated as of the Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (f) of this Section, except that the specified date referred to shall be a date not more than three Business Days prior to the Closing Time.
(h) No Legal Impediment to Issuance. No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any Japanese, U.S. federal, state or foreign governmental or regulatory authority that would, as of the Closing Time, prevent the issuance or sale of the Securities; and no injunction or order of any Japanese court, U.S. federal or state court or any other foreign court shall have been issued that would, as of the Closing Time, prevent the issuance or sale of the Securities.
(i) Ratings. At the Closing Time, the Securities shall be rated at least [[ ] by [insert name(s) of rating agency/agencies]] and the Company shall have delivered to the Representative[s] a letter dated the Closing Time, from each such rating agency, or other evidence satisfactory to the Representative[s], confirming that the Securities have such ratings; and since the date of this Agreement, there shall not have occurred a downgrading in the rating assigned to the Securities or any debt securities of the Company by Japan Credit Rating Agency, Ltd., Rating and Investment Information, Inc. or any “nationally recognized statistical rating agency,” as that term is defined by the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no such organization shall have publicly announced that it has under surveillance or review its rating of the Securities or any debt securities of the Company.
(j) DTC. At the Closing Time, the Securities shall have been designated eligible for clearing and settlement through the facilities of DTC.
(k) Approval of Listing. The approval for the listing of the Securities on the [insert name of the relevant securities exchange] shall not have been revoked by the Closing Time.
(l) Additional Documents. At the Closing Time, counsel for the Underwriters shall have been furnished with such documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the issuance and sale of the Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the Securities as herein contemplated shall be reasonably satisfactory in form and substance to the Representative[s] and counsel for the Underwriters.
(m) Termination of Agreement. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Representative[s] by notice to the Company at any time at or prior to the Closing Time, and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 1, 4(b), 6 through 8, 11 through 22, 25 and 26 shall survive any such termination and remain in full force and effect.
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SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company agrees to indemnify and hold harmless each Underwriter, its Affiliates, its selling agents, its and their directors, officers, agents, Affiliates and employees, and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including the Rule 430 Information or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, any Issuer Free Writing Prospectus, [any Pre-Offering Communication,] any Issuer Limited Use Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 6(d) below) any such settlement is effected with the written consent of the Company;
(iii) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by the Representative[s]), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representative[s] expressly for use in the Registration Statement (or any amendment thereto), including the Rule 430 Information, or any preliminary prospectus, any Issuer Free Writing Prospectus[, any Pre-Offering Communication] or the Prospectus (or any amendment or supplement thereto).
(b) Indemnification of Company, Directors and Officers. Each Underwriter, severally and not jointly, agrees to indemnify and hold harmless each of the Company, its directors and officers, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), including the Rule 430 Information or any preliminary prospectus, any Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representative[s] expressly for use therein.
(c) Actions against Parties; Notification. Each indemnified party shall give notice in writing as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. In the case of parties indemnified pursuant to Section 6(a) above, counsel to the indemnified parties shall be selected by the Representative[s], and, in the case of parties indemnified pursuant to Section 6(b) above,
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counsel to the indemnified parties shall be selected by the Company. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 or Section 7 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 6(a)(ii) hereof effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in Section 6 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other hand from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and of the Underwriters on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the Underwriters on the other hand in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities pursuant to this Agreement (before deducting expenses) received by the Company and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth on the cover of the Prospectus, bear to the aggregate initial public offering price of the Securities as set forth on the cover of the Prospectus.
The relative fault of the Company on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 7. The aggregate amount of losses, liabilities, claims, damages and expenses
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incurred by an indemnified party and referred to above in this Section 7 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, in no event shall an Underwriter be required to contribute any amount in excess of the amount by which the total underwriting discounts and commissions received by such Underwriter with respect to the offering of the Securities to the public exceeds the amount of any damages such Underwriter has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each Underwriter’s Affiliates and selling agents shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. The Underwriters’ respective obligations to contribute pursuant to this Section 7 are several in proportion to the principal amount of Securities set forth opposite their respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive. All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company or any of its subsidiaries submitted pursuant hereto, shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of any Underwriter or its Affiliates or selling agents, any person controlling any Underwriter, its officers or directors or any person controlling the Company and (ii) delivery of and payment for the Securities.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representative[s], on behalf of the Underwriters, may terminate this Agreement, by notice to the Company, at any time at or prior to the Closing Time (i) if there has been, since the time of execution of this Agreement or since the respective dates as of which information is given in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement), any material adverse change (or any development or event involving a prospective material adverse change of which the Company is aware) in the condition (financial or otherwise), business, prospects, results of operations or general affairs of the Company and its subsidiaries, whether or not arising in the ordinary course of business, or (ii) if there has occurred any material adverse change in the financial markets in Japan, the United Kingdom, the United States or other international financial markets, any act of terrorism, outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of the Representative[s], impracticable or inadvisable to market the Securities or to enforce contracts for the sale of the Securities, or (iii) if trading in any securities of the Company on any exchanges on which such securities are listed has been suspended or materially limited by the relevant governmental authorities or self-regulatory organizations, or if trading generally on the London Stock Exchange, the New York Stock Exchange, the Nasdaq Stock Market or the Tokyo Stock Exchange has been suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by such system or by order of the Commission, the Financial Industry Regulatory Authority of the United States, the Financial Services Agency of Japan, the U.K. Financial Conduct Authority or
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any other governmental authority other than daily limits or ranges imposed in the ordinary course by the Tokyo Stock Exchange, or (iv) if a material disruption has occurred in commercial banking or securities settlement or clearance services in Japan or the United States, or with respect to the Clearstream or Euroclear systems in Europe, or (v) if there occurs any change or development involving a prospective change in Japanese or United States taxation that would reasonably be expected to have a material adverse effect on the Securities or the transfer thereof, or (vi) if a banking moratorium has been declared by any relevant authority in Japan, the United Kingdom or the United States.
(b) Liabilities. If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 4(b), 6 through 8, 11 through 22, 25 and 26 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of the Underwriters shall fail at the Closing Time to purchase the Securities which it or they are obligated to purchase under this Agreement (the “Defaulted Securities”), the Representative[s] shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Representative[s] shall not have completed such arrangements within such 24-hour period, then:
(i) if the number of Defaulted Securities does not exceed 10% of the aggregate principal amount of the Securities to be purchased hereunder, each of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or
(ii) if the number of Defaulted Securities exceeds 10% of the aggregate principal amount of the Securities to be purchased hereunder and arrangements satisfactory to the Underwriters and the Company for the purchase of such Defaulted Securities are not made within 36 hours of such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of this Agreement, either the Representative[s] or the Company shall have the right to postpone the Closing Time for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. As used herein, the term “Underwriter” includes any person substituted for an Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to the Representative[s] c/o [insert address]; and notices to the Company shall be directed to it at 13-1, Nihonbashi 1-chome, Chuo-ku, Tokyo 103-8645, Japan, Attention: Treasury Department.
SECTION 12. No Advisory or Fiduciary Relationship. The Company acknowledges and agrees that (a) the purchase and sale of the Securities pursuant to this Agreement, including the determination of the public offering price of the Securities and any related discounts and commissions, is an arm’s-length commercial transaction between the Company, on the one hand, and the several Underwriters, on the other hand, (b) in connection with the offering contemplated hereby and the process leading to such transaction each Underwriter is and has been acting solely as a principal and is not the agent or fiduciary of the Company or any of its securityholders, creditors, employees or any other party, (c) no Underwriter has assumed or will assume an advisory or fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby or the process leading
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thereto (irrespective of whether such Underwriter has advised or is currently advising the Company on other matters) and no Underwriter has any obligation to the Company with respect to the offering contemplated hereby except the obligations expressly set forth in this Agreement, (d) the Underwriters and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company, and (e) the Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.
SECTION 13. Consent to Jurisdiction; Appointment of Agent for Service of Process; Waiver of Jury Trial.
(a) The Company irrevocably consents and agrees for the benefit of the Underwriters that any legal action, suit or proceeding against it with respect to its obligations, liabilities or any other matter arising out of or in connection with this Agreement or the transactions contemplated hereby may be brought in the courts of the State of New York or the federal courts of the United States located in the County of New York and any appellate court from any thereof and hereby irrevocably consents and irrevocably submits to the non-exclusive personal jurisdiction of each such court in person and generally and unconditionally with respect to any action, suit or proceeding for itself and in respect of its properties, assets and revenues.
(b) The Company has irrevocably designated, appointed and empowered Nomura Holding America Inc., with offices currently at Worldwide Plaza, 309 West 49th Street, New York, New York 10019-7316 (Attention: Legal Department – Head of Litigation) (the “Authorized Agent”), as its designee, appointee and agent to receive, accept and acknowledge for and on its behalf, and its properties, assets and revenues, service of any and all legal process, summons, notices and documents that may be served in any action, suit or proceeding brought against it in any such United States or state court located in the County of New York with respect to its obligations, liabilities or any other matter arising out of or in connection with this Agreement or the transactions contemplated hereby and that may be made on such designee, appointee and agent in accordance with legal procedures prescribed for such courts. The Company represents to each Underwriter that it has notified Nomura Holding America Inc. of such designation, appointment and empowerment, that Nomura Holding America Inc. has accepted the same and that such designation, appointment and empowerment is effective as of the date hereof. If for any reason such designee, appointee and agent hereunder shall cease to be available to act as such, the Company agrees to designate a new designee, appointee and agent in the County of New York on the terms and for the purposes of this Section 13 satisfactory to the Underwriters. The Company further hereby irrevocably consents and agrees to the service of any and all legal process, summons, notices and documents in any such action, suit or proceeding against it by serving a copy thereof upon the relevant agent for service of process referred to in this Section 13 (whether or not the appointment of such agent shall for any reason prove to be ineffective or such agent shall accept or acknowledge such service) or by mailing copies thereof by registered or certified air mail, postage prepaid, to it, at its address specified in this Agreement. The Company agrees that the failure of any such designee, appointee and agent to give any notice of such service to it shall not impair or affect in any way the validity of such service or any judgment rendered in any action or proceeding based thereon. Nothing herein shall in any way be deemed to limit the ability of the Underwriters to serve any such legal process, summons, notices and documents in any other manner permitted by applicable law or to obtain jurisdiction over the Company or bring actions, suits or proceedings against it in such other jurisdictions, and in such manner, as may be permitted by applicable law. The Company hereby irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this Agreement or the transactions contemplated hereby brought in the United States federal courts located in the County of New York or the courts of the State of New York located in the County of New York and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. The provisions of this Section 13 shall survive any termination of this Agreement, in whole or in part.
25
(c) The Company hereby waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
SECTION 14. Waiver of Immunities. To the extent that the Company or any of its properties, assets or revenues may have or may hereafter become entitled to, or have attributed to them, any right of immunity, on the grounds of sovereignty, from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, or from attachment in aid of execution of judgment, or from execution of judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any jurisdiction in which proceedings may at any time be commenced, with respect to their obligations, liabilities or any other matter under or arising out of or in connection with this Agreement or the transactions contemplated hereby, the Company hereby irrevocably and unconditionally, to the extent permitted by applicable law, waives and agrees not to plead or claim any such immunity and consents to such relief and enforcement.
SECTION 15. Foreign Taxes. Except as required by law, all payments by the Company to each of the Underwriters hereunder shall be made free and clear of, and without deduction or withholding for or on account of, any and all present and future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereinafter imposed, levied, collected, withheld or assessed by Japan or any other jurisdiction in which the Company has an office from which payment is made or deemed to be made, excluding (i) any such tax imposed by reason of such Underwriter having some connection with any such jurisdiction other than its participation as Underwriter hereunder, (ii) any income or franchise tax on the overall net income of such Underwriter imposed by the United States or any political subdivision of the United States, (iii) any taxes imposed as a result of a failure by such Underwriter to provide any form or certificate reasonably requested by the Company that relates to such Underwriter’s nationality, residence, identity or connection with the applicable taxing jurisdiction and that such Underwriter is legally able to provide, and (iv) any taxes imposed pursuant to Sections 1471 through 1474 of the United States Internal Revenue Code of 1986, as amended, any regulations or agreements thereunder, official interpretations thereof, or law implementing an intergovernmental approach thereto (all such non-excluded taxes and other amounts, “Foreign Taxes”). If the Company is required by law to deduct or withhold any Foreign Taxes from any payments to the Underwriters hereunder, then amounts payable under this Agreement shall, to the extent permitted by law, be increased to such amount as is necessary to yield and remit to each Underwriter an amount which, after deduction of all Foreign Taxes (including all Foreign Taxes payable on such increased payments) equals the amount that would have been received if no Foreign Taxes applied.
SECTION 16. Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder into any currency other than United States dollars, the parties hereto agree, to the fullest extent permitted by law, that the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Underwriters could purchase United States dollars with such other currency in The City of New York on the business day preceding that on which final judgment is given. The obligation of the Company with respect to any sum due from it to any Underwriter or any person controlling any Underwriter or any Affiliate of any Underwriter shall, notwithstanding any judgment in a currency other than United States dollars, not be discharged until the first business day following receipt by such Underwriter or controlling person or Affiliate of any sum in such other currency, and only to the extent that such Underwriter or controlling person or Affiliate may in accordance with normal banking procedures purchase United States dollars with such other currency. If the United States dollars so purchased are less than the sum originally due to such Underwriter or controlling person or Affiliate hereunder, the Company agrees as a separate obligation and notwithstanding any such judgment, to indemnify such Underwriter or controlling person or Affiliate against such loss. If the United States dollars so purchased are greater than the sum originally due to such Underwriter or controlling person or Affiliate hereunder, such Underwriter or controlling person or Affiliate agrees to pay to the Company an amount equal to the excess of the dollars so purchased over the sum originally due to such Underwriter or controlling person or Affiliate hereunder.
26
SECTION 17. Recognition of the U.S. Special Resolution Regimes.
(a) In the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime.
(b) In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime.
For purpose of this provision, the terms which follow shall have the meanings indicated:
“BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).
“Covered Entity” means any of the following:
(i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
(iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
SECTION 18. [Contractual Recognition of EU Bail-in. Notwithstanding and to the exclusion of any other term of this Agreement or any other agreements, arrangements, or understandings among the parties hereto, the Company acknowledges and accepts that a BRRD Liability arising under this Agreement may be subject to the exercise of Bail-in Powers by the Relevant Resolution Authority and acknowledges, accepts, and agrees to be bound by:
(a) the effect of the exercise of Bail-in Powers by the Relevant Resolution Authority in relation to any BRRD Liability of each Covered Underwriter (as defined below) to the Company under this Agreement, that (without limitation) may include and result in any of the following, or some combination thereof:
(i) the reduction of all, or a portion, of the BRRD Liability or outstanding amounts due thereon;
(ii) the conversion of all, or a portion, of the BRRD Liability into shares, other securities or other obligations of the relevant Covered Underwriter or another person, and the issue to or conferral on the Company of such shares, securities or obligations;
(iii) the cancellation of the BRRD Liability;
(iv) the amendment or alteration of any interest, if applicable, thereon, the maturity or the dates on which any payments are due, including by suspending payment for a temporary period; or
27
(b) the variation of the terms of this Agreement as they relate to any BRRD Liability of a Covered Underwriter, as deemed necessary by the Relevant Resolution Authority, to give effect to the exercise of the Bail-in Powers by the Relevant Resolution Authority.
For purpose of this Section 18, the terms which follow shall have the meanings indicated:
“Bail-in Legislation” means in relation to a member state of the European Economic Area which has implemented, or which at any time implements, the BRRD, the relevant implementing law, regulation, rule or requirement as described in the EU Bail-in Legislation Schedule from time to time.
“Bail-in Powers” means any Write-down and Conversion Powers as defined in the EU Bail-in Legislation Schedule in relation to the relevant Bail-in Legislation.
“BRRD” means Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms as amended, supplemented or replaced from time to time.
“BRRD Liability” means a liability in respect of which the relevant Bail-in Powers in the applicable Bail-in Legislation may be exercised.
“Covered Underwriter” means any Underwriter subject to the Bail-in Legislation.
“EU Bail-in Legislation Schedule” means the document described as such, then in effect, and published by the Loan Market Association (or any successor person) from time to time at https://www.lma.eu.com/documents-guidelines/eu-bail-legislation-schedule.
“Relevant Resolution Authority” means the resolution authority with the ability to exercise any Bail-in Powers in relation to the relevant Covered Underwriter.]
SECTION 19. [Contractual Recognition of U.K. Bail-in. Notwithstanding and to the exclusion of any other term of this Agreement or any other agreements, arrangements, or understandings among the parties hereto, the Company acknowledges and accepts that a U.K. Bail-in Liability arising under this Agreement may be subject to the exercise of U.K. Bail-in Powers by the relevant U.K. resolution authority, and acknowledges, accepts, and agrees to be bound by:
(a) the effect of the exercise of U.K. Bail-in Powers by the relevant U.K. resolution authority in relation to any U.K. Bail-in Liability of each U.K. Covered Underwriter (as defined below) to the Company under this Agreement, that (without limitation) may include and result in any of the following, or some combination thereof:
(i) the reduction of all, or a portion, of the U.K. Bail-in Liability or outstanding amounts due thereon;
(ii) the conversion of all, or a portion, of the U.K. Bail-in Liability into shares, other securities or other obligations of the relevant U.K. Covered Underwriter or another person, and the issue to or conferral on the Company of such shares, securities or obligations;
(iii) the cancellation of the U.K. Bail-in Liability;
(iv) the amendment or alteration of any interest, if applicable, thereon, the maturity or the dates on which any payments are due, including by suspending payment for a temporary period;
(b) the variation of the terms of this Agreement as they relate to any U.K. Bail-in Liability of a U.K. Covered Underwriter, as deemed necessary by the relevant U.K. resolution authority, to give effect to the exercise of the U.K. Bail-in Powers by the relevant U.K. resolution authority.
28
For purpose of this Section 19, the terms which follow shall have the meanings indicated:
“U.K. Bail-in Legislation” means Part I of the U.K. Banking Act 2009 and any other law or regulation applicable in the U.K. relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (otherwise than through liquidation, administration or other insolvency proceedings).
“U.K. Bail-in Liability” means a liability in respect of which the U.K. Bail-in Powers may be exercised.
“U.K. Bail-in Powers” means the powers under the U.K. Bail-in Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or affiliate of a bank or investment firm, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability.
“U.K. Covered Underwriter” means any Underwriter that is actually or potentially subject to U.K. Bail-in Powers.]
SECTION 20. Integration. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the Underwriters, or any of them, with respect to the subject matter hereof.
SECTION 21. Parties. This Agreement shall each inure to the benefit of and be binding upon the Underwriters and the Company and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters and the Company and their respective successors and the controlling persons and directors, officers, agents, Affiliates and employees referred to in Sections 6 and 7 hereof and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Underwriters and the Company and their respective successors, and said controlling persons and directors, officers, agents, Affiliates and employees and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase.
SECTION 22. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 23. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 24. Counterparts and Electronic Signatures. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. Each party acknowledges that electronic signatures, whether digital or encrypted, of a party may be included in this Agreement and, if so, are intended to authenticate this writing and to have the same force and effect as a manual signature. “Electronic signature” means any electronic sound, symbol, or process attached to or logically associated with a record and executed and adopted by a party with the intent to sign such record, including portable document file (“PDF”), facsimile or email electronic signatures.
SECTION 25. Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.
SECTION 26. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.
29
If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement between the Underwriters and the Company in accordance with its terms.
| Very truly yours, | ||
| NOMURA HOLDINGS, INC. | ||
| By: |
| |
| Name: | ||
| Title: | ||
[Underwriting Agreement]
CONFIRMED AND ACCEPTED,
as of the date first above written:
[insert name of Representative[s]]
| By: | ||
| Name: | ||
| Title: |
[Each for/For] itself and as representative of the other Underwriters named in Schedule A hereto
[Underwriting Agreement]
SCHEDULE A
| Name of Underwriter |
Principal | |
| [insert name of Representative[s]] |
$[ ] | |
| [·] |
$[ ] | |
|
| ||
| Total |
$[ ] | |
|
|
Sch. A-1
SCHEDULE B
Issuer Free Writing Prospectuses
Final Pricing Term Sheet[s] of Nomura Holdings, Inc., filed with the Commission on [date].
[Pre-Offering Communications]
The investor presentations, including visual aids, conducted by Nomura Holdings, Inc. on [date].
Sch. B-1
Pricing Term Sheet[s]
Terms of the [insert name of securities] due 20[ ]
Sch. B-2
Exhibit A
FORM OF OPINION AND LETTER OF SULLIVAN & CROMWELL LLP
TO BE DELIVERED PURSUANT TO SECTION 5(b)
Ex. A-1
Exhibit B
FORM OF OPINION AND LETTER OF ANDERSON MORI & TOMOTSUNE
TO BE DELIVERED PURSUANT TO SECTION 5(b)
Ex. B-1
Exhibit 4.3
NOMURA HOLDINGS, INC.
as the Company
and
CITIBANK, N.A.
as the Trustee
PERPETUAL SUBORDINATED INDENTURE
Dated as of [ ]
TABLE OF CONTENTS
| Page | ||||||
| ARTICLE 1 |
| |||||
| DEFINITIONS |
| |||||
| 1 | ||||||
| ARTICLE 2 |
| |||||
| SECURITIES |
| |||||
| 8 | ||||||
| 9 | ||||||
| 9 | ||||||
| 11 | ||||||
| 12 | ||||||
| 12 | ||||||
| Form, Denomination and Date of Securities; Payments of Interest |
12 | |||||
| 13 | ||||||
| 14 | ||||||
| 15 | ||||||
| 15 | ||||||
| 16 | ||||||
| 16 | ||||||
| ARTICLE 3 |
| |||||
| COVENANTS OF THE COMPANY |
| |||||
| 17 | ||||||
| 17 | ||||||
| 18 | ||||||
| 18 | ||||||
| 18 | ||||||
| 20 | ||||||
| 20 | ||||||
| 21 | ||||||
| 21 | ||||||
| 21 | ||||||
| Mandatory Cancellation of Interest Payments due to Interest Payable Amount Limitation |
22 | |||||
| Calculating Interest Payments upon the Occurrence of a Capital Ratio Event or Write-Up Date |
23 | |||||
| 23 | ||||||
| 23 | ||||||
| 24 | ||||||
| 24 | ||||||
| 25 | ||||||
| 25 | ||||||
i
ii
| ARTICLE 8 |
| |||||
| CONSOLIDATION, MERGER, SALE OR CONVEYANCE |
| |||||
| 43 | ||||||
| 44 | ||||||
| 44 | ||||||
| ARTICLE 9 |
| |||||
| SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS |
| |||||
| 44 | ||||||
| Application by Trustee of Funds Deposited for Payment of Securities |
45 | |||||
| 45 | ||||||
| Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years |
45 | |||||
| ARTICLE 10 |
| |||||
| MISCELLANEOUS PROVISIONS |
| |||||
| Incorporators, Stockholders, Officers and Directors of Company Exempt from Individual Liability |
45 | |||||
| Provisions of Indenture for the Sole Benefit of Parties and Securityholders |
45 | |||||
| 45 | ||||||
| 45 | ||||||
| Officer’s Certificates and Opinions of Counsel; Statements to be Contained Therein |
46 | |||||
| Conflict of any Provision of Indenture with Trust Indenture Act |
47 | |||||
| 47 | ||||||
| 47 | ||||||
| 47 | ||||||
| 47 | ||||||
| 48 | ||||||
| 48 | ||||||
| 48 | ||||||
| ARTICLE 11 |
| |||||
| REDEMPTION AND REPURCHASE OF SECURITIES |
| |||||
| 48 | ||||||
| 48 | ||||||
| 49 | ||||||
| 49 | ||||||
| 49 | ||||||
| 50 | ||||||
| Exclusion of Certain Securities from Eligibility for Selection for Redemption |
51 | |||||
| 51 | ||||||
| ARTICLE 12 |
| |||||
| SUBORDINATION OF SECURITIES |
| |||||
| 51 | ||||||
| 51 | ||||||
| Reimbursement of Excess Payment and Limited Right of Set-off |
52 | |||||
| 53 | ||||||
iii
| 53 | ||||||
| 53 | ||||||
| 53 | ||||||
| 53 | ||||||
| 54 | ||||||
| Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee’s Rights |
54 | |||||
| 54 | ||||||
| 54 | ||||||
| ARTICLE 13 |
| |||||
| WRITE-DOWN AND CANCELLATION |
| |||||
| 55 | ||||||
| 56 | ||||||
| 57 | ||||||
| 57 | ||||||
| Limitation of Rights upon a Non-Viability Event or Bankruptcy Event |
57 | |||||
| 57 | ||||||
| Additional Provisions Relating to a Write-Down and Cancellation |
58 | |||||
| 58 | ||||||
| ARTICLE 14 |
| |||||
| GOING CONCERN WRITE-DOWNS AND WRITE-UPS |
| |||||
| 58 | ||||||
| 60 | ||||||
| 61 | ||||||
| 61 | ||||||
| 61 | ||||||
| 62 | ||||||
| 62 | ||||||
| 63 | ||||||
| Additional Provisions Relating to Going Concern Write-Downs and Write-Ups |
63 | |||||
| 64 | ||||||
EXHIBITS
iv
CROSS REFERENCE SHEET
Cross-reference sheet of provisions of the Trust Indenture Act and this Indenture:
| Section of the Act | Section of Indenture | |
| 310(a)(1) and (2) | 5.08 | |
| 310(a)(3) and (4) | Inapplicable | |
| 310(a)(5) | Incorporated by Section 318(c) | |
| 310(b) | 5.09 | |
| 311(a) and (b) | Incorporated by Section 318(c) | |
| 312(a) | 3.07 | |
| 312(b) | Incorporated by Section 318(c) | |
| 312(c) | Incorporated by Section 318(c) | |
| 313(a) | 5.14 | |
| 313(b)(1) | Inapplicable | |
| 313(b)(2) | Incorporated by Section 318(c) | |
| 313(c) | Incorporated by Section 318(c) | |
| 313(d) | Incorporated by Section 318(c) | |
| 314(a) | 3.09 | |
| 314(b) | Inapplicable | |
| 314(c)(1) and (2) | 10.05 | |
| 314(c)(3) | Inapplicable | |
| 314(d) | Inapplicable | |
| 314(e) | 10.05 | |
| 315(a), (c) and (d) | 5.01 | |
| 315(b) | 4.11 | |
| 315(e) | 4.12 | |
| 316(a)(1) | 4.09 | |
| 316(a)(2) | Inapplicable | |
| 316(b) | 4.07 | |
| 316(c) | Incorporated by Section 318(c) | |
| 317(a) | 4.02, 4.04 | |
| 317(b) | 3.04 | |
| 318(a) | 10.06 |
Notes:
This cross-reference sheet shall not, for any purpose, be deemed to be a part of this Indenture.
Attention should also be directed to Section 318(c) of the Trust Indenture Act, which provides that the provisions of Sections 310 to and including 317 of the Trust Indenture Act are a part of and govern every qualified indenture, whether or not physically contained therein. Sections designated in the cross-reference sheet above as “Incorporated by Section 318(c)” are not physically contained herein but are incorporated in this Indenture automatically by Section 318(c) of the Trust Indenture Act.
v
THIS PERPETUAL SUBORDINATED INDENTURE, dated as of [ ] between Nomura Holdings, Inc., a joint stock corporation with limited liability under the laws of Japan (the “Company”), and Citibank, N.A. (the “Trustee”).
W I T N E S S E T H:
WHEREAS, the Company has duly authorized the issue from time to time of its unsecured and perpetual subordinated bonds, debentures, notes or other evidences of indebtedness to be issued in one or more series (the “Securities”) up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture, and to provide, among other things, for the authentication, delivery and administration thereof, the Company has duly authorized the execution and delivery of this Indenture; and
WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according to its terms have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the Securities by the holders thereof, the Company and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Securities as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Certain Terms Defined. The following terms (except as otherwise expressly provided herein or in the form of Security or any indenture supplemental hereto, or unless the context otherwise clearly requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section. All other terms used in this Indenture that are defined in the Trust Indenture Act or the definitions of which contained in the Securities Act are referred to in the Trust Indenture Act, including terms defined in the Trust Indenture Act by reference to the Securities Act (except as herein otherwise expressly provided or unless the context otherwise clearly requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of this Indenture. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles, and the term “generally accepted accounting principles” means such accounting principles as are generally accepted in the United States of America at the time of any computation. The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular.
“Additional Amounts” has the meaning set forth in Section 3.05.
“Additional Tier 1 Senior Dividend Preferred Shares” means the Company’s preferred shares ranked at the relevant time most senior in priority of payment as to dividends and qualifying as the Company’s Additional Tier 1 Capital under the Applicable Capital Adequacy Regulations.
“Additional Tier 1 Capital” means any and all items constituting Additional Tier 1 Capital (for the avoidance of doubt, excluding then applicable regulatory adjustments) under the Applicable Capital Adequacy Regulations and shall also include any successor or substitute term applicable pursuant to the Applicable Capital Adequacy Regulations.
“Additional Tier 1 Liabilities” means at any time instruments qualifying as the Company’s Additional Tier 1 Capital (other than the relevant series of Securities, but including any other series of Securities) that are
1
issued directly by the Company and are treated as liabilities under the Applicable Capital Adequacy Regulations (excluding any instruments issued or created by any consolidated subsidiary of the Company incorporated solely for the purposes of raising the Company’s regulatory capital (a “Special Purpose Company”) and qualifying as the Company’s Additional Tier 1 Capital).
“Adjusted Distributable Amounts” has the meaning set forth in Section 3.11.
“Agent” means any of the Registrar, Paying Agent and/or Authenticating Agent.
“Applicable Capital Adequacy Regulations” means the FIEA, and any orders, rules, regulations, ordinances, regulatory notices, guidelines and policies thereunder applicable at any time as the context may require under this Indenture, including, without limitation, the FSA’s “Establishment of standards on sufficiency of capital stock of a final designated parent company and its subsidiary entities, etc. compared to the assets held thereby” (2010 FSA Regulatory Notice No. 130, as amended) prescribing the capital adequacy regulations on a consolidated basis applicable to final designated parent companies (saishu shitei oyagaisha), including the Company.
“Authenticating Agent” means any Person authorized by the Trustee pursuant to Section 5.13 to act on behalf of the Trustee to authenticate the Securities.
“Authorized Agent” has the meaning set forth in Section 10.10.
“Bankruptcy Act” means Bankruptcy Act of Japan (Act No. 75 of 2004, as amended) or any successor legislation thereto.
“Bankruptcy Event” has the meaning set forth in Section 13.01.
“Board” means the Board of Directors of the Company or any duly authorized committee of such Board or any director(s), executive officer(s) or officer(s), or combination thereof, of the Company to whom such Board of Directors or duly authorized committee thereof or duly delegated director or executive officer thereof has duly delegated its authority.
“Board Resolution” means one or more resolutions or determinations to have been duly adopted or consented to by the Board and to be in full force and effect.
“breach” has the meaning set forth in Section 4.04.
“Business Day” means, with respect to any Security, a day that in the city of the Corporate Trust Office of the Trustee, and in The City of New York, Tokyo or any city (or in any of the cities, if more than one) in which amounts are payable, as specified in the form of such Security, and in any other city specified in an indenture supplemental hereto or in the form of such Security, is not a day on which banking institutions are authorized or required by law, regulation or executive order to close.
“Capital Ratio Event” has the meaning set forth in Section 14.01.
“Civil Rehabilitation Act” means the Civil Rehabilitation Act of Japan (Act No. 225 of 1999, as amended) or any successor legislation thereto.
“Clearing Organization” means, with respect to the Securities of any series issuable or issued in the form of one or more Registered Global Securities, the Person designated as Clearing Organization by the Company pursuant to Section 2.03 until a successor Clearing Organization shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Clearing Organization” shall mean or include each Person
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who is then a Clearing Organization hereunder, and if at any time there is more than one such Person, “Clearing Organization” as used with respect to the Securities of any such series shall mean the Clearing Organization with respect to the Registered Global Securities of that series.
“Commission” means the U.S. Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date.
“Companies Act” means the Companies Act of Japan (Act No. 86 of 2005, as amended) or any successor legislation thereto.
“Company” means Nomura Holdings, Inc., and, subject to Article 8, its successors and assigns.
“Condition for Liquidation Payment” has the meaning set forth in Section 12.02.
“Consolidated Common Equity Tier 1 Capital Ratio” means, as of any date, the Company’s Common Equity Tier 1 risk-weighted capital ratio on a consolidated basis, as calculated in accordance with the applicable standards set forth in the Applicable Capital Adequacy Regulations, and shall also include any successor or substitute term applicable pursuant to the Applicable Capital Adequacy Regulations, as of such date.
“Corporate Reorganization Act” means the Corporate Reorganization Act of Japan (Act No. 154 of 2002, as amended) or any successor legislation thereto.
“Corporate Trust Office” means the office of the Trustee at which the corporate trust business of the Trustee in the United States shall, at any particular time, be principally administered, which office is, at the date as of which this Indenture is dated, located at (a) solely for purposes of the transfer, exchange or surrender of the Securities, 480 Washington Boulevard, 30th Floor, Jersey City, New Jersey 07310, Attention: Agency & Trust (Nomura Holdings, Inc.), and (b) for all other purposes, 388 Greenwich Street, New York, New York 10013, Attention: Agency & Trust (Nomura Holdings, Inc.), Facsimile: +1 (347) 632-8640, or such other address as is referenced in Section 10.04; or as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office of any successor trustee (or such other address as such successor trustee may designate from time to time by notice to the Holders and the Company).
“Current Principal Amount” means at any time:
(a) with respect to the Securities outstanding, the then outstanding principal amount of such Securities, being the Original Principal Amount of such Securities at issuance, as such amount may be reduced on one or more occasions pursuant to a Going Concern Write-Down and/or reinstated on one or more occasions following a Write-Up, as the case may be, in accordance with the terms of the Securities and this Indenture; or
(b) with respect to any other liabilities or obligations, the then outstanding principal amount of such liability or obligation, as calculated in accordance with its terms and conditions, including the application of write-down or write-up provisions, if any.
“Deposit Insurance Act” means the Deposit Insurance Act of Japan (Act No. 34 of 1971, as amended) or any successor legislation thereto.
“Depositary” means, with respect to the Registered Global Securities, DTC or such other Person as shall be designated as Depositary by the Company pursuant to the last sentence of Section 2.07(a).
“Designated Financial Institution” has the meaning set forth in Section 3.05.
“Dollar”, “$” or “U.S. dollar” means the coin or currency of the United States of America that at the time of payment is legal tender for the payment of public and private debts.
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“DTC” means The Depository Trust Company, its nominees, and their respective successors.
“DTC Procedures” has the meaning set forth in Section 2.12(a).
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
“Expiration Date” has the meaning set forth in Section 6.02.
“FATCA” has the meaning set forth in Section 3.05.
“FIEA” means the Financial Instruments and Exchange Act (Act No. 25 of 1948, as amended) or any successor legislation thereto.
“FSA” means the Financial Services Agency of Japan or any successor or similar authority.
“Going Concern Full Write-Down Instrument” has the meaning set forth in Section 14.01.
“Going Concern Write-Down” has the meaning set forth in Section 14.02.
“Going Concern Write-Down Amount” has the meaning set forth in Section 14.01.
“Going Concern Write-Down Date” has the meaning set forth in Section 14.01.
“Going Concern Write-Down Instrument” means Additional Tier 1 Liabilities and at any time instruments qualifying as Additional Tier 1 Capital under the Applicable Capital Adequacy Regulations that by their terms provide for the Write Down or Conversion of such instruments (other than the Securities and Additional Tier 1 Liabilities) (including any such instruments issued or created by any Special Purpose Company).
“Going Concern Write-Down Notice” has the meaning set forth in Section 14.06.
“Holder,” “holder of Securities,” “Securityholder” or other similar terms mean the holder of any Security.
“Incorporated Provision” has the meaning set forth in Section 10.06.
“Indenture” means this instrument as originally executed and delivered or, if amended or supplemented as herein provided, as so amended or supplemented or both, and shall include the forms and terms of particular series of Securities established as contemplated hereunder.
“Interest Payable Amount” has the meaning set forth in Section 3.11.
“Interest Payable Amount Limitation” has the meaning set forth in Section 3.11.
“Interest Recipient Information” has the meaning set forth in Section 3.05.
“Japanese Taxes” has the meaning set forth in Section 3.05.
“Junior Securities” means any liabilities of the Company ranking in right of interest payments effectively junior to the Securities in respect of either of the terms as described in Sections 3.10 and 3.11 (excluding any liabilities owed to any Special Purpose Company), and any instruments qualifying as the Company’s regulatory capital issued by any Special Purpose Company ranking in right of dividend or interest payments effectively junior to the Securities in respect of either of the terms as described in Sections 3.10 and 3.11.
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“Liquidation Claim” has the meaning set forth in Section 12.02.
“Liquidation Distributable Amount” has the meaning set forth in Section 12.02.
“Liquidation Event” means the commencement of a liquidation proceeding (seisan) (excluding a special liquidation proceeding (tokubetsu seisan) under the Companies Act) by or with respect to the Company under the Companies Act.
“Liquidation Junior Liabilities” means any liabilities of the Company that rank, or are expressed to rank, effectively subordinate in priority of payment as to liquidation distributions to liabilities of the Company under the relevant series of Securities (except for liabilities which have become due and payable on or before the date of the occurrence of a Liquidation Event and remain unpaid).
“Liquidation Parity Liabilities” means any liabilities of the Company that rank, or are expressed to rank, effectively pari passu as to liquidation distributions with liabilities of the Company under the relevant series of Securities (which may include any existing or future Additional Tier 1 Liabilities) (except for liabilities which have become due and payable on or before the date of the occurrence of a Liquidation Event and remain unpaid).
“New York Banking Day” means any day except a Saturday, Sunday or a legal holiday in The City of New York or a day on which banking institutions in The City of New York are authorized or required by law, regulation or executive order to close.
“Non-Viability Event” has the meaning set forth in Section 13.01.
“Notice of Breach” has the meaning set forth in Section 4.04.
“Officer’s Certificate” means a certificate signed by any one Responsible Officer of the Company authorized by the Board or a representative executive officer (daihyo shikkoyaku) of the Company to execute any such certificate. Each such certificate shall comply with Section 314 of the Trust Indenture Act and include the statements provided for in Section 10.05.
“Opinion of Counsel” means an opinion in writing signed by legal counsel, who may be counsel to the Company, reasonably acceptable to the Trustee and which opinion shall be in form and substance reasonably satisfactory to the Trustee. Each such opinion shall comply with Section 314 of the Trust Indenture Act and include the statements provided for in Section 10.05, if and to the extent required hereby.
“Original Principal Amount” means, with respect to the Securities and any other liabilities or obligations, the principal amount of such Securities or other liability or obligation on the date such Securities or other liability or obligation was issued or created.
“Outstanding” when used with reference to Securities, subject to the provisions of Section 6.04, means, as of any particular time, all Securities authenticated and delivered by the Trustee under this Indenture, except:
(a) Securities theretofore cancelled by the Trustee or accepted by the Trustee for cancellation;
(b) Securities that have been cancelled in connection with a Write-Down and Cancellation pursuant to Section 13.02;
(c) Securities for which payment or redemption money in the necessary amount has been theretofore deposited with the Trustee in trust or any Paying Agent (other than the Company) or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities;
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(d) Securities in substitution for which other Securities shall have been authenticated and delivered, or which shall have been paid, pursuant to the terms of Section 2.09 (except with respect to any such Security as to which proof satisfactory to the Trustee is presented that such Security is held by a Person in whose hands such Security is a legal, valid and binding obligation of the Company); or
(e) Securities owned by the Company or one of its affiliates.
“Participant” has the meaning set forth in Section 3.05.
“Parity Securities” means any liabilities of the Company that are subject to substantially the same terms in respect of rights of interest payments as the terms of the relevant series of Securities described in Sections 3.10 and 3.11 (excluding the relevant series of Securities and any liabilities owed to any Special Purpose Company), and any instruments qualifying as the Company’s regulatory capital issued by any Special Purpose Company that is subject to substantially the same terms in respect of rights of dividends or interest payments as the terms of the relevant series of Securities as described in Sections 3.10 and 3.11.
“Paying Agent” means the paying agent appointed by the Company as paying agent and/or transfer agent for the Securities or any series thereof.
“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political sub-division thereof or other entity, whether or not having a separate legal personality.
“Place of Payment” means, when used with respect to the Securities of any particular series, the place or places where the principal of and interest, if any, on the Securities of that series are payable, as contemplated in Section 2.03(l).
“Principal” means (i) as the context requires, the Current Principal Amount of the Securities at any relevant time and (ii) where such term is used in relation to any payment, the principal if, when and to the extent due and payable under this Indenture and the Securities of any applicable series. The term “Principal,” whenever used with reference to the Securities or any Security or any portion thereof, shall be deemed to include “and premium, if any.” For the avoidance of doubt, “premium” referred to in the previous sentence means amounts exceeding the face value of a Security payable by the Company to the Holders upon redemption or such other event provided for in a supplemental indenture or in a form of Security.
“record date” has the meaning set forth in Section 2.07(c).
“Register” has the meaning set forth in Section 2.08(a).
“Registered Global Security” means a Security evidencing all or a part of a series of Registered Securities, issued to the Clearing Organization for such series in accordance with Section 2.03 and bearing the legend prescribed by any applicable form of Security or any supplemental indenture.
“Registered Security” means any Security registered on the Register.
“Registrar” has the meaning set forth in Section 2.08(a).
“Responsible Officer” when used with respect to the Trustee means any managing director, vice president, trust associate, relationship manager, transaction manager, client service manager, any trust officer or any other officer located at the Corporate Trust Office of the Trustee who customarily performs functions similar to those performed by any persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject and in each
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such case, who shall have direct responsibility for the day to day administration of this Indenture. When used with respect to the Company, “Responsible Officer” means the President, the Deputy President, the Chief Financial Officer or other executive officer (shikkoyaku) or other officer or employee of the Company as may be designated in writing by the Board.
“Securities Act” means the United States Securities Act of 1933, as amended.
“Security” or “Securities” has the meaning stated in the first recital of this Indenture, or, as the case may be, Securities that have been authenticated and delivered under this Indenture.
“Senior Dividend Preferred Shares” means any preferred shares of the Company ranked at the relevant time most senior in priority of payment as to dividends.
“Senior Indebtedness” means all liabilities (including liabilities under dated subordinated debt) of the Company other than (i) liabilities of the Company under the relevant series of Securities (except for liabilities which have become due and payable on or before the date of the occurrence of a Liquidation Event and remain unpaid), (ii) Liquidation Parity Liabilities and (iii) Liquidation Junior Liabilities.
“Senior Liquidation Preferred Shares” means the preferred shares of the Company ranked at the relevant time most senior in priority of payment as to liquidation distributions.
“Special Purpose Company” has the meaning set forth in the definition of Additional Tier 1 Liabilities.
“Special Taxation Measures Act” has the meaning set forth in Section 3.05(a).
“Specially-Related Person of the Company” has the meaning set forth in Section 3.05(a).
“Specified Corporate Trust Office” means Citibank, N.A., London Branch, Corporate Trust Department, Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, United Kingdom, Attention: Agency and Trust, Facsimile +353 1622 2210.
“Suspension Period” means the period commencing on the New York Banking Day immediately following the date on which the relevant Write-Down and Cancellation Notice or the relevant Going Concern Write-Down Notice is received by DTC (except that such period may commence on the second New York Banking Day immediately following the day on which the Write-Down and Cancellation Notice or the Going Concern Write-Down Notice is received by DTC, if DTC so determines in its discretion in accordance with its rules and procedures) and ending, (i) in case of the occurrence of a Non-Viability Event, on the Write-Down and Cancellation Date, (ii) in case of the occurrence of a Bankruptcy Event, on the date on which DTC reflects the Write-Down and Cancellation on its systems in accordance with its rules and procedures, or (iii) in the case of the receipt of a Going Concern Write-Down Notice by DTC setting forth that the Current Principal Amount of any series of the Securities will be reduced to one cent per $1,000 in Original Principal Amount, in accordance with any further instruction given by the Company relating to any subsequent interest period during which a Write-Up Event occurs, as the case may be.
“Tax Documentation” has the meaning set forth in Section 2.12(a).
“Total Going Concern Write-Down Amount” has the meaning set forth in Section 14.01.
“Trust Indenture Act” means, except as otherwise provided in Article 7, the United States Trust Indenture Act of 1939 as in force at the date as of which this Indenture was originally executed.
“Trustee” means the Person identified as “Trustee” in the first paragraph hereof and, subject to the provisions of Article 5, shall also include any successor trustee.
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“Trustee Parties” has the meaning set forth in Section 5.02(r).
“USA Patriot Act” has the meaning set forth in Section 10.13.
“Write-Down and Cancellation” has the meaning set forth in Section 13.02.
“Write-Down and Cancellation Date” has the meaning set forth in Section 13.01.
“Write-Down and Cancellation Notice” has the meaning set forth in Section 13.06(a).
“Write-Down or Conversion” means, with respect to any Going Concern Write-Down Instrument, the write-down or, if applicable, conversion to shares of common stock of all or part of the Current Principal Amount outstanding of such Going Concern Write-Down Instrument (including an acquisition of shares of common stock in exchange for all or part of such Going Concern Write-Down Instruments by a holder of the Going Concern Write-Down Instruments pursuant to the Companies Act).
“Write-Up” has the meaning set forth in Section 14.07.
“Write-Up Amount” has the meaning set forth in Section 14.07.
“Write-Up Date” has the meaning set forth in Section 14.07.
“Write-Up Event” has the meaning set forth in Section 14.07.
“Write-Up Instrument” means any Going Concern Write-Down Instrument that includes provisions permitting the reinstatement of previously written-down principal amounts substantially similar to those applicable to the relevant series of Securities.
“Write-Up Notice” has the meaning set forth in 14.08.
“Written Application for Tax Exemption” has the meaning set forth in Section 3.05.
ARTICLE 2
SECURITIES
Section 2.01 Forms Generally. The Securities of each series shall be substantially in such form (not inconsistent with this Indenture) as shall be established by or pursuant to a Board Resolution and set forth in an Officer’s Certificate or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have imprinted or otherwise reproduced thereon such legend or legends, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with any rules of any securities exchange or to conform to general usage, all as may be determined by the officer or officers executing such Securities, as evidenced by their execution of the Securities.
The definitive Securities shall be printed or lithographed on security printed paper or may be produced in any other manner, all as determined by the officer or officers executing such Securities, as evidenced by his or their execution of such Securities.
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Section 2.02 Form of Trustee’s Certification of Authentication. Subject to the provisions of Section 5.13, the Trustee’s certificate of authentication on all Securities shall be in substantially the following form:
Certificate of Authentication:
This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.
| Date: |
|
| Citibank, N.A. | ||
| as Trustee | ||
| By: |
| |
| Name: | ||
| Title: |
Section 2.03 Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series, and unless provided for otherwise in the form of Security or in an indenture supplemental hereto, each such series of Securities, when issued, will constitute direct and unsecured obligations of the Company that are conditional and subordinated, as described under Article 12. Claims in respect of each series of the Securities shall at all times rank pari passu and without any preference among themselves. As described under Article 12, upon the occurrence of a Liquidation Event of the Company, the Securities (i) will be subordinated to all of the existing and future Senior Indebtedness (which includes dated subordinated debt of the Company), (ii) will rank at least pari passu with all of the existing and future Liquidation Parity Liabilities (which include Additional Tier 1 Liabilities) and (iii) will rank senior to all of the existing and future Liquidation Junior Liabilities; provided, however, that the Securities will be subject to a Going Concern Write-Down and a Write-Down and Cancellation upon the occurrence of a Non-Viability Event, Bankruptcy Event or Capital Ratio Event, as described under Articles 13 and 14.
The Securities shall be perpetual obligations of the Company in respect of which there is no fixed maturity or redemption date.
There shall be established in or pursuant to a Board Resolution (which Board Resolution may provide general authorization for such action and may provide that the specific terms of such action may be determined by officers of the Company authorized thereby) and set forth in an Officer’s Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series,
(a) the issue date of the Securities;
(b) the title and type of the Securities of the series (which shall distinguish the Securities of the series from all other Securities);
(c) the ranking of the Securities, including the subordination terms for the Securities;
(d) the initial aggregate principal amount of the Securities and any limits on the total aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 2.08, Section 2.09, Section 2.11, Section 4.03 or Section 11.06);
(e) the issue price at which the Securities are to be originally issued, expressed as a percentage of the principal amount, and the original issue date;
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(f) the denominations in which Securities of the series shall be issuable;
(g) the coin or currency in which the Securities of that series are denominated or in which principal, premium, if any, and interest, if any, are payable;
(h) the date or dates on which the principal and premium of the Securities of that series, if any and to the extent applicable, are payable;
(i) the rate or rates (which may be fixed or variable) at which the Securities of the series shall bear interest, and the manner of calculating such rate or rates, if applicable;
(j) the date or dates from which such interest, if any and to the extent applicable, shall accrue, the interest payment dates on which such interest shall be payable and the record dates (in the case of Registered Securities) for the determination of Holders to whom interest is payable and/or the method by which such or date or dates shall be determined;
(k) if the amount of payments of principal or any premium or interest on the Securities of the series may be determined with reference to a formula or an index, including, but not limited to, an index based on a coin or currency other than that in which the Securities of the series are denominated, or with reference to any currencies, securities or baskets of securities, commodities or indices, the manner in which such amounts shall be determined, to the extent permitted under applicable regulatory capital or other requirements of the FSA or other applicable regulatory authority;
(l) the manner in which and the place or places where, if applicable, the principal of, premium of and any interest on the Securities of the series shall be payable (subject to the provisions of Section 3.02);
(m) the right or requirement, if any, to extend the interest payment periods or cancel the payment of interest and the duration and effect of that extension or cancellation;
(n) any terms required by or advisable under applicable laws or regulations or rating agency criteria, including laws and regulations relating to attributes required for the Securities to qualify as capital or certain liabilities for regulatory, rating or other purposes;
(o) if applicable, any modification or elimination of any covenants or conditions or events that would constitute breaches with respect to the Securities of such series;
(p) any conversion or exchange features of the Securities;
(q) whether and under what circumstances the Company will pay Additional Amounts on the Securities for any tax, assessment or governmental charge withheld or deducted and, if so, whether it will have the option to redeem those Securities rather than pay the Additional Amounts, to the extent permitted under applicable regulatory capital or other requirements of the FSA or other applicable regulatory authority;
(r) the period or periods within which, the price or prices at which, and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company, to the extent permitted under applicable regulatory capital or other requirements of the FSA or other applicable regulatory authority;
(s) the identity of any agents for the Securities, including trustees, depositaries, authenticating, calculating or paying agents, transfer agents or registrars or any clearing organization for any series;
(t) any restrictions applicable to the offer, sale or delivery of the Securities;
(u) any provisions for the discharge of the Company’s obligations relating to the Securities;
(v) material U.S. federal or Japanese tax considerations;
(w) if the Securities of such series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of such certificates, documents or conditions;
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(x) if the Securities are to be issued in other than book-entry form;
(y) any listing of the Securities on a securities exchange;
(z) the terms and conditions under which the Company will be able to “reopen” a previous issue of the Securities of such series and issue additional Securities of that series;
(aa) whether the Securities of a series shall be excluded from participation with the Securities of other series or otherwise differentiated from the Securities of other series in relation to any matter in respect of which the Securities generally or Securities of more than one series are contemplated by this Indenture to act together or otherwise be treated or affected collectively;
(bb) any write-down, write-up, bail-in or other provisions applicable to a particular series of Securities required by, relating to or in connection with, applicable regulatory capital or other requirements of the FSA or other applicable regulatory authority; and
(cc) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be identical except as to denomination, issue date, issue price and, if applicable, the date from which interest shall accrue and the date on which interest shall be first paid, if and to the extent due, except as may otherwise be provided in or pursuant to a Board Resolution and set forth in an Officer’s Certificate or in an indenture supplemental hereto, as referenced above. Securities of any one series need not be issued at the same time, and unless otherwise provided, a series may be reopened for issuance of additional Securities of such series without the consent of any Holder.
Section 2.04 Authentication and Delivery of Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver such Securities upon the written order of the Company, signed by any one Responsible Officer of the Company authorized by the Board to execute any such order, without any further action by the Company. In authenticating such Securities and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 5.01) shall be fully protected in relying upon:
(a) a copy of any Board Resolution relating to such series certified by a Responsible Officer of the Company;
(b) an executed supplemental indenture, if any;
(c) an Officer’s Certificate setting forth the form and terms of the Securities as required pursuant to Section 2.01 and Section 2.03 and prepared in accordance with Section 10.05; and
(d) an Opinion of Counsel, prepared in accordance with Section 10.05, to the effect that
(i) the form or forms and terms of such Securities have been established by or pursuant to a Board Resolution or by a supplemental indenture as permitted by Section 2.01 and Section 2.03 in conformity with the provisions of this Indenture;
(ii) such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms;
(iii) all laws and requirements in respect of the execution and delivery by the Company of the Securities have been complied with; and
(iv) covers such other matters as the Trustee may reasonably request, including execution, delivery and validity of the Indenture and the Securities.
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The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken by the Company, or if the Trustee in good faith shall determine that such action would expose the Trustee to personal liability to existing Holders.
Section 2.05 Execution of Securities. The Securities shall be signed on behalf of the Company by one (or, if so specified in the indenture supplemental hereto or Board Resolution establishing the terms thereof, more than one) Responsible Officer of the Company, which Securities may, but need not, be attested. Such signatures may be the manual or facsimile signatures of the present or any future such officers. Typographical and other minor errors or defects in any such reproduction of any such signature shall not affect the validity or enforceability of any Security that has been duly authenticated and delivered by the Trustee.
In case any officer of the Company who shall have signed any of the Securities shall cease to be such officer before the Security so signed shall be authenticated and delivered by the Trustee or disposed of by the Company, such Security nevertheless may be authenticated and delivered or disposed of as though the person who signed such Security had not ceased to be such officer of the Company; and any Security may be signed on behalf of the Company by such persons as, at the actual date of the execution of such Security, shall be a Responsible Officer of the Company, although at the date of the execution and delivery of this Indenture any such person was not such an officer.
Section 2.06 Certificate of Authentication. Only such Securities as shall bear thereon a certificate of authentication substantially in the form hereinbefore recited, executed by the Trustee by the manual signature of one of its authorized officers, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee upon any Security executed by the Company shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture.
Section 2.07 Form, Denomination and Date of Securities; Payments of Interest.
(a) The Securities shall be issued as Registered Global Securities and in denominations as shall be specified as contemplated by Section 2.03. The Securities of any series shall be denominated in minimum principal amounts of $200,000 and in integral multiples of $[1,000] in excess thereof, or such other denominations, integral multiples and currencies as the Company may designate in a form of Security or an indenture supplemental hereto or Board Resolution establishing the terms thereof, in an aggregate principal amount that shall equal the aggregate principal amount of the Securities that are to be issued. The Securities shall be issuable as Registered Securities without coupons. The Securities shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plans as the Responsible Officer of the Company executing the same may determine, as evidenced by such Responsible Officer’s execution of such Securities.
Any of the Securities may be issued with appropriate insertions, omissions, substitutions and variations, and may have imprinted or otherwise reproduced thereon such legend or legends, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with the rules of the Depositary or any securities market in which the Securities are admitted to trading, or to conform to general usage, or as the Company may determine appropriate to provide notice of any provision of Japanese law or regulation relating to taxation.
Each Registered Global Security shall be delivered by the Trustee to and deposited with the Depositary or, pursuant to the Depositary’s instructions, shall be delivered by the Trustee on behalf of the Depositary to and deposited with the Depositary’s custodian, and in either case shall be registered in such name as the Depositary shall specify. Registered Global Securities may be deposited with such other Depositary that is a clearing agency registered under the Exchange Act as the Company may from time to time designate in writing to the Trustee, and shall bear such legend as may be appropriate.
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(b) Each Security shall be dated the date of its authentication and shall bear interest, if any, from the date, and shall be payable, if and to the extent due, on the dates, specified on the reverse of the applicable form of Security, which shall be specified as contemplated by Section 2.03.
(c) The Person in whose name any Registered Security of any series is registered on any record date applicable to the series with respect to any interest payment date for the series shall be entitled to receive the interest, if any, payable on such interest payment date notwithstanding any transfer or exchange of such Security subsequent to such record date and prior to such interest payment date, except if and to the extent the Company does not pay the interest due on such interest payment date for such series (and to the extent such interest is not otherwise cancelled pursuant to any provision herein), in which case such unpaid interest shall be paid to the Persons in whose names Outstanding Securities for the series are registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such previously unpaid interest) established by notice given by mail or in accordance with clearing system procedures by or on behalf of the Company to the holders of Securities of the series not less than 15 days preceding such subsequent record date. The term “record date” as used with respect to any interest payment date (except a date for payment of previously unpaid interest) shall have the meaning set forth in the applicable form of reverse of the Securities of any particular series, or, if no such date is so specified, shall be the day five Business Days immediately preceding the applicable interest payment date.
Section 2.08 Registration, Transfer and Exchange of Securities.
(a) An agent appointed by the Company, acting as the Company’s agent for such purposes (the “Registrar”), will keep books for the registration, transfer and exchange of the Securities at the Specified Corporate Trust Office of the Registrar. The Registrar shall also act as the transfer agent with respect to the transfer or exchange of the Securities or a beneficial interest in the Securities. The Registrar will keep a record of all Securities (the “Register”) at said office. The Register will show the amount of the Securities, the date of issue, all subsequent transfers and changes of ownership in respect thereof and the names, tax identifying numbers (if relevant to a specific holder), addresses of the registered holders of the Securities and any payment instructions with respect thereto (if different from a holder’s registered address). The Registrar will also maintain a record which will include notations as to whether the Securities have been paid, fully or partially written down, written up or cancelled, and, in the case of mutilated, destroyed, stolen or lost Securities, whether such Securities have been replaced. In the case of the replacement of any of the Securities, such records will include notations of each Security so replaced, and the Security issued in replacement thereof. In the case of the full or partial write-down, write-up or the cancellation of any of the Securities, such records will include notations of each Security so fully or partially written down, written up or cancelled and the date on which such Security was fully or partially written down, written up or cancelled. The Registrar shall upon prior written request make the Register and such records available during normal office hours to the Company, or any Person authorized by the Company in writing, for inspection and for the taking of copies thereof or extracts therefrom, and, at the expense of the Company, the Registrar shall deliver to such Persons all lists of Securityholders, their addresses and amounts of such holdings as they may request. In acting hereunder and in connection with the Securities, the Registrar shall act solely as an agent of the Company.
The respective principal amounts of each Registered Global Security may be increased or decreased by endorsement on the Register by the Registrar of appropriate notations evidencing the dates and amounts of such increases and decreases in connection with transactions contemplated or permitted hereby.
The Register and the records referred to above shall be in written form in the English language or in any other form capable of being converted into such form within a reasonable time.
(b) Upon due presentation for registration of transfer of any Registered Security of any series at any such office or agency to be maintained for the purpose as provided in Section 3.02, the Company shall execute and the Trustee shall authenticate Securities and deliver in the name or names of the transferee or transferees a new Security or Securities of the same series in authorized denominations for a like aggregate principal amount.
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Any Security or Securities of any series may be exchanged for a Security or Securities of the same series in other authorized denominations, in an equal aggregate principal amount. Securities of any series to be exchanged shall be surrendered at any office or agency to be maintained by the Company for the purpose as provided in Section 3.02, and the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor the Security or Securities of the same series which the Holder making the exchange shall be entitled to receive, bearing numbers not contemporaneously outstanding.
All Securities presented for registration of transfer, exchange, redemption or payment shall be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder or his attorney duly authorized in writing.
The Company shall not be required to exchange or register a transfer of (a) any Securities of any series for a period of 15 days next preceding the first mailing of a notice of redemption of the Securities of such series to be redeemed, or (b) any Securities selected, called or being called for redemption except, in the case of any Security where public notice has been given that such Security is to be redeemed in part, the portion thereof not so to be redeemed.
All Securities issued upon any transfer or exchange of Securities pursuant to the provisions of this Section shall be valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.
(c) Transfer, registration and exchange shall be permitted as provided in this Section without any charge to the Securityholder except for the expenses of delivery (if any) not made by regular mail (such delivery to be at the sole risk and expense of the transferee or holder, as applicable) and except, if the Company or the Registrar shall so require, the payment of a sum sufficient to cover any stamp duty, tax or governmental charge or insurance charge that may be imposed in relation thereto. Registration of the transfer of a Security by the Registrar shall be deemed to be the sole acknowledgment of such transfer on behalf of the Company.
(d) The Trustee shall have no responsibility or obligation to any beneficial owner of a Registered Global Security, a member of, or a participant in the Depositary or any other Person with respect to the accuracy of the records of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption or repurchase) or the payment of any amount, under or with respect to such Securities, and the Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners. The rights of beneficial owners in any Registered Global Security shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary.
(e) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
Section 2.09 Mutilated, Defaced, Destroyed, Lost and Stolen Securities. In case any temporary or definitive Security shall become mutilated, defaced or be destroyed, lost or stolen, the Company in its discretion may execute, and upon the written request of any officer of the Company, the Trustee shall authenticate and deliver a new Security of the same series, bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated or defaced Security, or in lieu of and substitution for the Security so destroyed, lost or stolen. In every case the applicant for a substitute Security shall furnish to the Company and to the Trustee and any agent of the Company or the Trustee such security, indemnity and/or pre-funding as may be required by them to indemnify and defend and to save each of them harmless and, in every case of destruction, loss or theft,
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evidence to their satisfaction of the destruction, loss or theft of such Security and of the ownership thereof and in the case of mutilation or defacement the applicant shall surrender the Security to the Trustee or such agent.
Upon the issuance of any substitute Security, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee or its agent) connected therewith. In case any Security which has been called for redemption in full shall become mutilated or defaced or be destroyed, lost or stolen, the Company, may instead of issuing a substitute Security, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated or defaced Security), if the applicant for such payment shall furnish to the Company and the Trustee and any agent of the Company or the Trustee such security, indemnity and/or pre-funding as any of them may require to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and the Trustee and any agent of the Company or the Trustee evidence to their satisfaction of the destruction, loss or theft of such Security and of the ownership thereof.
Every substitute Security of any series issued pursuant to the provisions of this Section, by virtue of the fact that any such Security is destroyed, lost or stolen, shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Securities of such series duly authenticated and delivered hereunder. All Securities shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced or destroyed, lost or stolen Securities and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.
Section 2.10 Cancellation of Securities. All Securities surrendered for payment, redemption, registration of transfer or exchange, or, to the extent required, in connection with a Write-Down and Cancellation, if surrendered to the Company or any agent of the Company or the Paying Agent, shall be delivered to the Registrar or the Paying Agent, as applicable, for cancellation or, if surrendered to the Registrar or the Paying Agent, as applicable, shall be cancelled by it; and no Securities shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Registrar or the Paying Agent, as applicable, shall dispose of cancelled Securities held by it in accordance with its procedures for the disposition of cancelled securities in effect as of the date of such disposition and, upon receipt of a written request from the Company, deliver a certificate of disposition to the Company. If the Company shall acquire any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are delivered to the Registrar or the Paying Agent, as applicable, for cancellation. Any Write-Down and Cancellation Notice delivered to the Registrar or the Paying Agent, as applicable, shall include an instruction to cancel the Securities subject to such Write-Down and Cancellation, and the Registrar and the Paying Agent shall effect such cancellation.
Section 2.11 Temporary Securities. Pending the preparation of definitive Securities for any series, the Company may execute and the Trustee shall authenticate and deliver temporary Securities for such series (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Trustee). Temporary Securities of any series shall be issuable as Registered Securities without coupons, of any authorized denomination, and substantially in the form of the definitive Securities of such series but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Company with the reasonable concurrence of the Trustee. Temporary Securities may contain such reference to any provisions of this Indenture as may be appropriate. Every temporary Security shall be executed by the Company and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities. Without unreasonable delay the Company shall execute definitive Securities of such series and thereupon temporary Securities of such series may be surrendered in
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exchange therefor without charge at each office or agency to be maintained by the Company for that purpose pursuant to Section 3.02, and the Trustee shall authenticate and deliver in exchange for such temporary Securities of such series a like aggregate principal amount of definitive Securities of the same series of authorized denominations. Until so exchanged, the temporary Securities of any series shall be entitled to the same benefits under this Indenture as definitive Securities of such series unless otherwise established pursuant to Section 2.03.
Section 2.12 Japanese Withholding Tax.
(a) In compliance with Japanese tax laws and the practices of tax authorities in Japan, in respect of any interest payment on a series of Securities issued in global or book-entry form pursuant to this Indenture or any supplemental indenture hereto, any Paying Agent shall act in accordance with the “Working Draft of Operating Manual on Japanese Withholding Tax on Certain International Issues Held Through DTC” (as amended) as published by notice of DTC (the “DTC Procedures”), if DTC is acting as Clearing Organization with respect to such series or with respect to depositary interests representing the Securities of such series, or in accordance with such other similar procedures as may be established by another Clearing Organization. Except as otherwise provided in this Indenture, any such Paying Agent shall be responsible only for performing such services as are specifically provided for in the DTC Procedures or such other procedures actually known by the Paying Agent, as applicable and as may be amended or modified and communicated to the Paying Agent from time to time. Any such Paying Agent and the Company may rely on the information provided in the Written Application for Tax Exemption (as defined below) and other documentation in the absence of actual knowledge to the contrary. If any interest payment on a series of Securities is due to be made hereunder and if and so long as payments of interest (if any) by the Company to any Paying Agent may be made without deduction or withholding for or on account of Japanese tax only upon receipt of certifications, the Written Application for Tax Exemption, notifications or other documentation in compliance with Japanese tax law requirements (“Tax Documentation”), the relevant Paying Agent at the direction of the Company shall (i) collect the required Tax Documentation from the Clearing Organization (or Holders of the Securities, if definitive Securities representing such series of Securities have been issued); (ii) provide any required confirmations of information available to it; and (iii) promptly deliver such Tax Documentation so received to the Company for filing with the relevant Japanese district tax office. Any such Paying Agent may rely on the information provided in Tax Documentation (including where relevant, supporting documentation) in the absence of actual knowledge that such information is incorrect. Neither the Company nor the Paying Agent shall have any liability for any withholding of tax arising as a result of a late delivery of the required Tax Documentation or incorrectly completed Tax Documentation.
(b) If a Holder of the Securities or the holder of a beneficial interest in the Securities satisfies the requirements for claiming an exemption from Japanese withholding tax after the date on which an amount in respect of such tax is withheld and before the date on which the tax is actually paid to the Japanese tax authorities, then the Company or the Paying Agent acting at the direction of the Company shall, to the extent reasonably practicable and to the extent not prohibited by Japanese tax law, repay the amount withheld (after deduction of reasonable costs, including amounts in respect of changes in foreign exchange rates) to the Holder.
(c) The Paying Agent shall furnish forms of certifications to Holders upon request, and shall use reasonable efforts to assist Holders in claiming available exemptions, but shall not be liable for a Holder’s failure to qualify for such an exemption. Based on the Tax Documentation received, the Paying Agent will make the appropriate calculations of interest payable after making the relevant deductions in accordance with this Section. The Paying Agent will remit all amounts of tax withheld under this Section to or to the written order of the Company as soon as reasonably practicable in order to enable the Company to make the necessary payments to the relevant tax office in accordance with applicable laws and regulations. The Paying Agent shall retain copies of Tax Documentation for a period of five years from the date as prescribed by Japanese tax laws and shall make such documentation available for inspection by the Company and any relevant tax authorities in Japan upon written request given in reasonable notice from the Company.
Section 2.13 CUSIP, ISIN Numbers and Common Codes. The Company, in issuing the Securities of any series may use CUSIP, ISIN numbers and/or Common Codes, if then generally in use, and, if so, the Trustee
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shall use CUSIP, ISIN numbers and/or Common Codes in notices provided hereunder as a convenience to Holders; provided, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any such notice and that reliance may be placed only on the other identification numbers printed on the Securities, and any notified event or action shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the CUSIP, ISIN numbers or Common Codes.
ARTICLE 3
COVENANTS OF THE COMPANY
Section 3.01 Payment of Principal and Interest. The Company covenants and agrees for the benefit of each series of Securities (subject to the interest cancellation provisions of this Article 3, the Write-Down and Cancellation provisions of Article 13 and the Going Concern Write-Down provisions of Article 14) that it will duly and punctually pay or cause to be paid, if and to the extent due, the principal of, and interest on, if and to the extent due, each of the Securities of such series (together with any Additional Amounts payable pursuant to the terms of such Securities) at the place or places, at the respective times and in the manner provided in such Securities. Subject to any other provisions that may be established pursuant to Section 2.03, the interest on Securities (together with any Additional Amounts payable, if and to the extent due, pursuant to the terms of such Securities) shall be payable only to or upon the written order of the Holders thereof and, at the option of the Company, may be paid by wire transfer. The Trustee and the Paying Agent shall not be responsible in any manner whatsoever to pay any administrative costs imposed by banks in connection with the making of any payments by wire transfer. Neither the Trustee nor any Paying Agent shall have any obligation to advance its own funds, and all payments on the Securities shall be made from immediately available funds deposited by the Company with the Trustee or the Paying Agent no later than 10:00 a.m. New York time on the relevant payment date, provided, however, to the extent any such funds are received by the Trustee or the Paying Agent after 10:00 a.m. New York time, on such payment date, such funds will be deemed deposited within one Business Day of receipt thereof.
The interest, if any, due in respect of any temporary or definitive Security, together with any Additional Amounts payable in respect thereof, as provided in the terms and conditions of such Security, shall be payable, subject to the conditions set forth in Section 3.05, only upon presentation of such Security to the Trustee thereof for notation thereon of the payment of such interest. Except as provided in Section 3.05, no Additional Amounts will be payable as a result of the withholding or deduction of any taxes or duties of whatever nature imposed or levied as a result of any laws or regulations. Any amount withheld from payments on the Securities will be treated as paid to the Holders thereof.
Section 3.02 Offices for Payments, etc. So long as any of the Securities remain Outstanding, the Company will maintain in each Place of Payment the following for each series: an office or agency (a) where the Securities may be presented or surrendered for payment, (b) where Registered Securities may be presented or surrendered for registration of transfer and for exchange as provided in this Indenture and (c) where notices and demands to or upon the Company in respect of the Securities or of this Indenture may be served. The Company will give to the Trustee written notice of the location of any such office or agency and of any change of location thereof. Unless otherwise specified in accordance with Section 2.03, the Company hereby initially designates the Corporate Trust Office of the Paying Agent as the office to be maintained by it for each such purpose in relation to Registered Securities. In case the Company shall fail to so designate or maintain any such office or agency or shall fail to give such notice of the location or of any change in the location thereof, presentations, surrenders and demands may be made and notices may be served at the Corporate Trust Office.
The Company may from time to time designate one or more offices or agencies (in addition to or in lieu of the office or agency established pursuant to the preceding paragraph) where the Securities of a series may be presented or surrendered for payment and where Registered Securities of that series may be presented or
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surrendered for registration of transfer or for exchange as provided in this Indenture, and the Company may from time to time rescind any such designation, as the Company may deem desirable or expedient; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain the agencies provided for in this Section. The Company will give to the Trustee prompt written notice of any such designation or rescission thereof.
Section 3.03 Appointment to Fill a Vacancy in Office of Trustee. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 5.09, a Trustee, so that there shall at all times be a Trustee with respect to each series of Securities hereunder.
Section 3.04 Paying Agents. Whenever the Company shall appoint a Paying Agent other than the Trustee with respect to the Securities of any series, it will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section,
(a) that it will hold all sums received by it as such agent for the payment of the principal of or interest on the Securities of such series (whether such sums have been paid to it by the Company or by any other obligor on the Securities of such series) for the benefit of the Holders of the Securities of such series or of the Trustee, and that it will pay the principal of, and interest on, each series of the Securities as provided in this Indenture,
(b) that (unless such Paying Agent is the same bank as the Trustee) it will give the Trustee notice of any failure by the Company (or by any other obligor on the Securities of such series) to make any payment of the principal of or interest on the Securities of such series when the same shall be due and payable, and
(c) that (unless such Paying Agent is the same bank as the Trustee) it will pay any such sums so held by it to the Trustee upon the Trustee’s written request at any time during the continuance of the failure referred to in Section 3.04(b) above.
The Company will, no later than 10:00 a.m. New York time on each due date of the principal of or interest on the Securities of such series, deposit or cause to be deposited with the Paying Agent a sum sufficient to pay such principal or interest so becoming due, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of any failure to take such action, provided, however, to the extent any such funds are received by the Paying Agent after 10:00 a.m. New York time, on such payment date, such funds will be deemed deposited within one Business Day of receipt thereof.
If the Company shall act as its own Paying Agent with respect to the Securities of any series, it will, on or before each due date of the principal of or interest on the Securities of such series, set aside, segregate and hold for the benefit of the Holders of the Securities of such series a sum sufficient to pay such principal or interest so becoming due. The Company will promptly notify the Trustee of any failure to take such action.
Anything in this Section to the contrary notwithstanding, the Company may at any time, for the purpose of obtaining a satisfaction and discharge with respect to one or more or all series of Securities hereunder, or for any other reason, pay or cause to be paid to the Trustee all sums held by the Trustee in trust for any such series by the Company or any Paying Agent hereunder, as required by this Section, such sums to be held by the Trustee upon the trusts herein contained.
Anything in this Section to the contrary notwithstanding, the agreement by the Trustee or the Company to hold sums in trust as provided in this Section is subject to the provisions of Section 9.03 and Section 9.04.
In acting hereunder and in connection with the Securities, the Paying Agent shall act solely as an agent of the Company.
Section 3.05 Additional Amounts. All payments of principal (and premium, if any) or interest in respect of the Securities will be made without withholding or deduction for or on account of any present or future taxes,
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duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of Japan or any political subdivision or authority thereof or therein having power to tax (“Japanese Taxes”), unless such withholding or deduction of such Japanese Taxes is required by law. In that event, the Company shall pay to the Holders such additional amounts (“Additional Amounts”) as will result in the receipt by or on behalf of the Holders or beneficial owners of such amounts as would have been received by them had no such withholding or deduction been required, provided that, no Additional Amounts shall be payable with respect to any Security:
(a) to, or to a third party on behalf of, a Securityholder or beneficial owner of a Security who is an individual non-resident of Japan or a non-Japanese corporation and is liable for such Japanese Taxes in respect of such Security by reason of its (1) having some connection with Japan other than the mere holding of such Security, or (2) being a person having a special relationship with the Company as described in Article 6, paragraph 4 of the Act on Special Measures Concerning Taxation of Japan (Act No. 26 of 1957, as amended) (the “Special Taxation Measures Act” and, each such person, a “Specially-Related Person of the Company”); or
(b) to, or to a third party on behalf of, a Securityholder or beneficial owner of a Security (A) who would otherwise be exempt from any such withholding or deduction but who fails to comply with any applicable requirement to provide Interest Recipient Information (as defined below) or to submit a Written Application for Tax Exemption (as defined below) to the Paying Agent to whom the relevant Security is presented (where presentation is required), or (B) whose Interest Recipient Information is not duly communicated through the Participant (as defined below) and the relevant Clearing Organization to such Paying Agent; or
(c) to, or to a third party on behalf of, a Securityholder or beneficial owner of a Security who is for Japanese tax purposes treated as an individual resident of Japan or a Japanese corporation (except for (A) a Designated Financial Institution (as defined below) which complies with the requirement to provide Interest Recipient Information or to submit a Written Application for Tax Exemption and (B) an individual resident of Japan or a Japanese corporation who duly notifies (directly or through the Participant or otherwise) the relevant Paying Agent of its status as not being subject to Japanese Taxes to be withheld or deducted by the Company, by reason of such individual resident of Japan or Japanese corporation receiving interest on the relevant Security through a payment handling agent in Japan appointed by it); or
(d) where such Security is presented for payment (where presentation is required) more than 30 days after the date on which such payment first becomes due or after the date on which the full amount payable is duly provided for, whichever occurs later, except to the extent that the Holder of the Security would have been entitled to such Additional Amounts on presenting the same for payment on the last day of such 30-day period; or
(e) any combination of (a) through (d) above;
nor shall Additional Amounts be paid with respect to any payment on a Security to or on behalf of a Securityholder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of Japan to be included in the income, for tax purposes, of a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner who, in each case, would not have been entitled to the Additional Amounts had such beneficiary, settlor, member or beneficial owner been the Securityholder. The obligation to pay Additional Amounts with respect to any taxes, duties, assessments or governmental charges shall not apply to (A) any estate, inheritance, gift, sales, transfer, personal property or any similar tax, duty, assessment or governmental charge or (B) any tax, duty, assessment or governmental charge which is payable otherwise than by deduction or withholding from payments of principal of (and premium, if any) or interest on the Security. References to principal (and premium, if any) and interest in respect of the Security will be deemed to include any Additional Amounts due which may be payable in respect of the principal (or premium, if any) or interest.
Where a Security is held through a participant of a Clearing Organization or a financial intermediary, in each case, as prescribed by the Special Taxation Measures Act (each, a “Participant”), in order to receive
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payments free of withholding or deduction by the Company for, or on account of, Japanese Taxes, if the relevant beneficial owner is (1) an individual non-resident of Japan or a non-Japanese corporation (other than a Specially-Related Person of the Company) or (2) a Japanese financial institution or financial instruments business operator falling under certain categories prescribed by the cabinet order under Article 6, paragraph 11 of the Special Taxation Measures Act (a “Designated Financial Institution”), such beneficial owner shall, at the time of entrusting a Participant with the custody of the relevant Security, provide certain information prescribed by the Special Taxation Measures Act and the cabinet order and other regulations thereunder to enable the Participant to establish that such beneficial owner is exempted from the requirement for Japanese Taxes to be withheld or deducted (the “Interest Recipient Information”) and advise the Participant if the beneficial owner ceases to be so exempted (including where the beneficial owner who is an individual non-resident of Japan or a non-Japanese corporation becomes a Specially-Related Person of the Company).
Where a Security is not held by a Participant, in order to receive payments free of withholding or deduction by the Company for, or on account of, Japanese Taxes, if the relevant beneficial owner is (i) an individual non-resident of Japan or a non-Japanese corporation (other than a Specially-Related Person of the Company) or (ii) a Designated Financial Institution, such beneficial owner shall, prior to each time at which it receives interest, submit to the relevant Paying Agent a written application for tax exemption (hikazei tekiyo shinkokusho) (a “Written Application for Tax Exemption”) in a form obtainable from the Paying Agent stating, inter alia, the name and address of the beneficial owner, the title of the Security, the relevant interest payment date, the amount of interest and the fact that the beneficial owner is qualified to submit the Written Application for Tax Exemption, together with documentary evidence regarding its identity and residence.
No Additional Amounts will be payable for or on account of any deduction or withholding imposed pursuant to Sections 1471-1474 of the U.S. Internal Revenue Code of 1986, as amended, the U.S. Treasury regulations thereunder and any other official guidance thereunder (“FATCA”), any intergovernmental agreement entered into with respect to FATCA, or any law, regulation or other official guidance enacted in any jurisdiction implementing, or relating to, FATCA, similar legislation under the laws of any other jurisdiction, or any such intergovernmental agreement.
If there is any withholding or deduction for or on account of Japanese Taxes with respect to payments on the Securities, the Company will use reasonable efforts to obtain certified copies of tax receipts evidencing the payment of such Japanese Taxes from the Japanese taxing authority imposing such Japanese Taxes, and if certified copies are not available, the Company will use reasonable efforts to obtain other evidence of payment satisfactory to the Trustee. The Trustee shall make such certified copies or other evidence available to the Holders or the beneficial owners of the Securities upon reasonable request to the Trustee.
The Company will pay all stamp, court or documentary taxes or any excise or property taxes, charges or similar levies and other duties, if any, which may be imposed by Japan, the United States or any political subdivision or any taxing authority thereof or therein, with respect to this Indenture or any indenture supplemental hereto, or as a consequence of the initial issuance, execution, delivery, registration or enforcement of the Securities.
Section 3.06 Certificate of the Company. So long as any Securities are Outstanding under this Indenture, the Company will furnish to the Trustee within 120 days of the end of the Company’s fiscal year each year (which fiscal year ends March 31 and beginning with the year following the first issuance of any Securities pursuant to this Indenture) a brief certificate (which need not comply with Section 10.05) from the Responsible Officer of the Company, as to his or her knowledge of the Company’s compliance with all conditions and covenants under this Indenture (such compliance to be determined without regard to any period of grace or requirement of notice provided under this Indenture) substantially in the form set forth in Exhibit A.
Section 3.07 Securityholders Lists. If and so long as the Trustee shall not be the Registrar for the Securities of any series, the Company will furnish or cause to be furnished to the Trustee a list in such form as the Trustee
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may reasonably require of the names and addresses of the Holders of the Securities of such series pursuant to Section 312 of the Trust Indenture Act (a) not more than 15 days after each record date for the payment of interest on such Securities, as hereinabove specified, as of such record date and on dates to be determined pursuant to Section 2.03 for non-interest bearing securities in each year, and (b) at such other times as the Trustee may reasonably request in writing, within 30 days after receipt by the Company of any such request as of a date not more than 15 days prior to the time such information is furnished.
Section 3.08 Statement by Officers as to Breach. The Company shall deliver to the Trustee, reasonably promptly after the Company becomes aware of the occurrence of an event which, with notice or the lapse of time or both, would constitute a breach, an Officer’s Certificate setting forth the details of such event and the action which the Company proposes to take with respect thereto.
Section 3.09 Reports by the Company. The Company covenants to file with the Trustee, within 30 days after the Company files the same with the Commission, copies of any annual reports and of the information, documents and other reports that the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act as long as any Securities are Outstanding hereunder. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such reports shall not constitute actual or constructive notice or knowledge of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on an Officer’s Certificate).
Section 3.10 Optional Cancellation of Interest Payments. If the Company determines that it is necessary to cancel payment of the interest on any series of Securities at any time and in its sole discretion, the Company may cancel payment of all or part of the interest accrued on such series of Securities on an interest payment date. The Company may cancel any payment of all or part of interest pursuant to the foregoing, even if no cancellation of interest is required or the amount so cancelled exceeds the amount the Company is required to cancel due to the Interest Payable Amount Limitation, as described below under Section 3.11.
If the Company determines not to make an interest payment (or if the Company determines to make a payment of a portion, but not all, of such interest payment) on any interest payment date, such non-payment will be deemed to be an effective cancellation of such interest payment (or the portion of such interest payment not paid) without any further action being taken or any other condition being satisfied. Interest that is deemed cancelled will not be due and shall not accumulate or be payable at any time thereafter.
If the Company determines to cancel an interest payment on any series of Securities (in whole or in part) in its sole discretion (and not pursuant to applicable laws or orders or administrative actions of the FSA or any other relevant Japanese supervisory authority, including an order of the FSA to submit and carry out a capital distribution constraints plan) on an interest payment date under this Section, (i) until such time the Company has determined to make an interest payment or cancel an interest payment (in whole or in part) on the Securities that shall become due and payable on the immediately following interest payment date or if earlier, such time that all of the Securities have been redeemed or repurchased and cancelled in accordance with this Indenture, the Company shall procure that the Board shall not resolve, or present its own proposal at a general meeting of shareholders, to (x) make a payment of a cash dividend on shares of the common stock or other classes of shares of the Company qualifying as the Company’s Additional Tier 1 Capital (excluding Additional Tier 1 Senior Dividend Preferred Shares) or (y) make a payment of a cash dividend on the Additional Tier 1 Senior Dividend Preferred Shares in excess of the product of one-half of the amount of the preferred cash dividend on such Additional Tier 1 Senior Dividend Preferred Shares and a ratio, the numerator of which is the portion of the amount of interest determined by the Company to be paid on such series of Securities on such interest payment date, and the denominator of which is the full amount of interest which should have been paid on such series of Securities on such interest payment date (for the purposes of the calculation of the full amount of interest which should have been paid on such series of Securities, the amount of interest shall be calculated without application of the mandatory cancellation of interest payment provisions of Section 3.11, even in the case where such
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provisions are applied) to the Company’s shareholders, and (ii) the Company shall procure that the proportion of the amount that the Company cancels in respect of interest or dividends on or in respect of any Additional Tier 1 Liabilities that are due and payable on the same date as such interest payment date to the full amount of such interest or dividends which should have been paid before cancellation on such date be at least equal to the proportion of the amount that the Company cancels in respect of the interest on such series of Securities on such interest payment date to the full amount of such interest on such series of Securities which should have been paid before cancellation on such interest payment date.
For the purposes of the determination of the proportion of the cancellation of interest or dividends on any Additional Tier 1 Liabilities, interest or dividends on or in respect of any Additional Tier 1 Liabilities shall be deemed to be due and payable on the same date as the applicable interest payment date in relation to the relevant series of Securities, notwithstanding the effect of any adjustments resulting from the business day conventions applicable to such series of Securities and those applicable to such Additional Tier 1 Liabilities.
Section 3.11 Mandatory Cancellation of Interest Payments due to Interest Payable Amount Limitation. In addition to the Company’s ability to cancel interest payments in its sole discretion, as described in Section 3.10, interest payments on any series of Securities will be subject to a limitation based on the Interest Payable Amount (such limitation being referred to as the “Interest Payable Amount Limitation”) and, as a result, the Company will be prohibited from paying, and shall cancel, all or part of the interest on such series of Securities on an interest payment date (including Additional Amounts with respect thereto, if any), if, and to the extent that, the interest payable on such series of Securities on such interest payment date (including Additional Amounts with respect thereto, if any) exceeds the Interest Payable Amount.
“Interest Payable Amount” means, in respect of any interest payment date, the product of the Adjusted Distributable Amounts on such interest payment date and a ratio, the numerator of which is the amount of interest (including Additional Amounts with respect thereto, if any) that should have been paid on the relevant series of Securities on such interest payment date, and the denominator of which is the aggregate amount of interest (including Additional Amounts with respect thereto, if any) that should have been paid on the relevant series of Securities on such interest payment date and dividends or interest (including any amounts with respect thereto substantially similar to Additional Amounts, if any) that should have been paid in respect of any Senior Dividend Preferred Shares and any Parity Securities on the same date as such interest payment date (rounding any amount less than a whole cent down to the nearest whole cent).
“Adjusted Distributable Amounts” means, in respect of any date, the distributable amounts (bunpai kano gaku) of the Company on such date as calculated in accordance with the Companies Act, after deducting the sum of any dividend or interest (including Additional Amounts with respect thereto, or any amounts with respect thereto substantially similar to Additional Amounts, as applicable, if any) that has been paid in respect of the relevant series of Securities, any Parity Securities and any Junior Securities from the beginning of the fiscal year of the Company in which such date falls until the date immediately preceding such date.
For the purposes of the calculation of the Interest Payable Amounts or the Adjusted Distributable Amounts, any dividend or interest (including Additional Amounts with respect thereto, or any amounts with respect thereto substantially similar to Additional Amounts, as applicable, if any) shall be deemed to be paid in respect of the relevant series of Securities, any Senior Dividend Preferred Shares, any Parity Securities and any Junior Securities on the date without any adjustments resulting from the methods of determining the Business Days in relation to the Securities and the Business Days in relation to any Senior Dividend Preferred Shares, Parity Securities and Junior Securities.
For the purposes of the calculation of the Interest Payable Amounts or the Adjusted Distributable Amounts, the amounts of interest or dividends (including Additional Amounts with respect thereto, or any amounts with respect thereto substantially similar to Additional Amounts, as applicable, if any) in respect of the relevant series of Securities, any Senior Dividend Preferred Shares, Parity Securities and Junior Securities that are not
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denominated in Japanese yen shall be calculated in Japanese yen, and the Interest Payable Amounts and the amount of interest (including Additional Amounts with respect thereto, if any) on the relevant series of Securities that is required to be cancelled on such interest payment date shall be initially calculated in Japanese yen and converted into U.S. dollars, each in a manner that the Company deems appropriate.
Section 3.12 Calculating Interest Payments upon the Occurrence of a Capital Ratio Event or Write-Up Date. If one or more Capital Ratio Event(s) occur during an interest period, the Securities shall, for the entirety of such interest period, bear interest based on the Current Principal Amount of the Securities on the immediately following interest payment date, after giving effect to the Going Concern Write-Down(s) as if the Going Concern Write-Down(s) resulting from such Capital Ratio Event(s) had occurred on the first day of such interest period.
If a Write-Up Date occurs during an interest period, the Securities shall bear interest for such interest period as follows:
(i) for the portion of the interest period beginning on, and including, the first day of such interest period and ending on, but excluding, the first Write-Up Date, the Securities shall bear interest based on the Current Principal Amount of the Securities on the date immediately preceding such Write-Up Date, without giving effect to the Write-Up; provided, however, that, in the case where one or more Capital Ratio Event(s) occurs during a period beginning on, and including, such first Write-Up Date and ending on, but excluding, the immediately following interest payment date, and the smallest among the Current Principal Amount of the Securities on respective dates during such period is less than the Current Principal Amount of the Securities on the date immediately preceding such Write-Up Date, the Securities shall bear interest based on such smallest Current Principal Amount of the Securities;
(ii) for the portion of the interest period, if any, beginning on, and including, the date immediately succeeding the relevant Write-Up Date and ending on, but excluding, the immediately following Write-Up Date, the Securities shall bear interest based on the Current Principal Amount of the Securities on the date immediately preceding such immediately following Write-Up Date, without giving effect to the Write-Up occurring on such immediately following Write-Up Date; provided, however, that, in the case where one or more Capital Ratio Event(s) occurs during a period beginning on, and including, such immediately following Write-Up Date and ending on, but excluding, the immediately following interest payment date, and the smallest among the Current Principal Amount of the Securities on respective dates during such period is less than the Current Principal Amount of the Securities on the date immediately preceding such immediately following Write-Up Date, the Securities shall bear interest based on such smallest Current Principal Amount of the Securities; and
(iii) for the portion of the interest period beginning on, and including, the last Write-Up Date in such interest period and ending on, but excluding, the immediately following interest payment date, the Securities shall bear interest on the Current Principal Amount of the Securities on the immediately following interest payment date, after giving effect to the Write-Up.
For subsequent interest periods, the Securities shall continue to bear interest based on such Current Principal Amount of the Securities on the relevant interest payment date until any subsequent interest period during which one or more Capital Ratio Event(s) or a Write-Up Date occur again in accordance with the terms of the Securities.
Section 3.13 Cessation of Accrual of Interest. Notwithstanding anything to the contrary contained in the terms of the Securities, no interest shall accrue on the Securities (i) during the period when the Current Principal Amount of the Securities is one cent per $1,000 in Original Principal Amount, (ii) after the date fixed for redemption, or (iii) during any period where a Liquidation Event occurs and continues.
Section 3.14 Subject to Other Provisions. Notwithstanding anything to the contrary contained in the terms of the Securities, any interest payments under the Securities shall be subject to the interest cancellation
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provisions of Article 3, the subordination provisions of Article 12, the Write-Down and Cancellation provisions of Article 13 and the Going Concern Write-Down provisions and the Write-Up provisions of Article 14.
Section 3.15 Effect of Cancellation of Interest Payment. Interest payments are non-cumulative, and any interest amount (including Additional Amounts with respect thereto, if any), the payment of which is cancelled (in whole or in part) either in the Company’s discretion or because such cancellation is mandatory due to the Interest Payable Amount Limitation, will be deemed not to have accrued and will not be due and payable at any time thereafter, and the Company shall be discharged and released from any and all of its obligations to pay such cancelled interest (and Additional Amounts with respect thereto, if any) on the Securities. Non-payment of such cancelled interest (or Additional Amount with respect thereto, if any) shall not constitute a breach, a default, an event of default or an event of acceleration under the terms of the Securities or this Indenture. Accordingly, Holders of the Securities will not have any claim therefor, whether or not interest is paid in respect of any other period.
Each Holder of the Securities, by subscribing for, purchasing or otherwise acquiring such Securities, agrees that if any payment of interest in respect of the Securities all or part of which should have not been paid to such Holder upon the proper application of the optional or mandatory interest payment cancellation provisions is made to such Holder, such payment shall be deemed null and void, and such Holder or the Trustee or the Paying Agent (to the extent it has not paid such amount to any Holder) (as the case may be) shall be obliged to return the amount of the payment promptly and in any event within ten days of receiving notice of the payment, and also thereby agrees that any liabilities of the Company to such Holder or in respect of interest on the Securities which was cancelled under the optional or mandatory interest payment cancellation provisions shall not be set off against any liabilities of such Holder owed to the Company.
Section 3.16 Agreement to Interest Cancellation. Each Holder of any Securities, by subscribing for, purchasing or otherwise acquiring such Securities, accepts and agrees (but not solely limited to the following) that:
(a) no amount of interest (including Additional Amounts with respect thereto, if any) shall become due and payable in respect of the relevant interest period to the extent that it has been (x) cancelled (in whole or in part) by the Company at its sole discretion (including pursuant to any capital distribution constraints plan) and/or (y) required to be cancelled (in whole or in part) as a result of the Interest Payable Amount Limitation, and such Holders shall be bound by the interest cancellation provisions of this Article 3;
(b) a cancellation of interest (including Additional Amounts with respect thereto, if any) (in each case, in whole or in part) in accordance with the terms of this Indenture shall not constitute a breach, a default, an event of default or an event of acceleration under the terms of the Securities;
(c) interest (including Additional Amounts with respect thereto, if any) will only be due and payable on an interest payment date to the extent it is not cancelled in accordance with the provisions described in Sections 3.10 and 3.11;
(d) any interest (including Additional Amounts with respect thereto, if any) cancelled (in each case, in whole or in part) in the circumstances described in Article 3 shall not be due and shall not accumulate or be payable at any time thereafter, and Holders of the Securities shall have no rights thereto or to receive any additional interest or compensation as a result of such cancellation;
(e) except as otherwise described in Article 3 or prohibited by applicable law or regulations, the Company has the right to use the funds from cancelled payments of interest (including Additional Amounts with respect thereto, if any) without restriction; and
(f) such Holder shall be deemed to have authorized, directed and requested DTC and any other intermediary and the Paying Agent to take any and all necessary action, if required, to implement an interest payment cancellation of the Securities without any further action or direction on the part of such Holder.
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Section 3.17 Notices of Cancellation of Interest Payments. If the Company determines to cancel all or part of a payment of interest on a series of Securities in its sole discretion as described in Section 3.10, including pursuant to any capital distribution constraints plan, or if the Company cancels all or part of a payment of interest (including Additional Amounts with respect thereto, if any) on a series of Securities because such cancellation is required due to the Interest Payable Amount Limitation as described in Section 3.11, the Company will endeavor to provide a written notice of such cancellation to the Holders of such series of Securities, the Trustee and the Paying Agent in accordance with the terms of this Indenture at least ten Business Days prior to the relevant interest payment date. If such notice is to be delayed, the Company will endeavor to provide such notice as soon as practicable. Such notice shall be substantially in the form attached hereto as Exhibit B and include, (i) if the Company determines to cancel all or part of a payment of interest on such series of Securities in its sole discretion as described under Section 3.10 including pursuant to any capital distribution constraints plan, the amount of the interest on such series of Securities to be cancelled and the amount of interest on such series of Securities to be paid (if any), or (ii) if the Company cancels all or part of a payment of interest (including Additional Amounts with respect thereto, if any) on such series of Securities because such cancellation is required due to the Interest Payable Amount Limitation as described in Section 3.11, the Interest Payable Amount applicable to all of the relevant series of the Securities, on the relevant interest payment date. Any failure or delay by the Company to provide such notice will not have any impact on the effectiveness of, or otherwise invalidate, any such cancellation of interest payment, nor give holders of the Securities any rights as a result of such failure.
Section 3.18 Notices to Holders. The Company shall deliver to the Trustee an advance copy of any Company notice to Holders before it is delivered to Holders. Citibank, N.A.’s name may not be used in any such notice without the express permission of Citibank, N.A.
ARTICLE 4
LIMITED REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
Section 4.01 No Event of Default or Rights of Acceleration; Subordination upon Liquidation Event. Non-payment of principal of or interest on any series of the Securities (including Additional Amounts with respect thereto, if any) or breach of any covenant in this Indenture or the Securities or any other event shall not constitute an event of default or an event of acceleration under this Indenture or the Securities or give rise to any right of the Holders or the Trustee to declare the principal of or interest on any series of Securities to be due and payable or accelerate any payment of such principal or interest, and there are no events of default or circumstances in respect of the Securities that entitle the holders of Securities or the Trustee to require that the Securities become immediately due and payable.
Upon the occurrence and continuation of a Liquidation Event, the rights of the holders of any series of Securities will be subordinated pursuant to the subordination provisions set forth in Article 12.
Section 4.02 Trustee May File Proof of Claim. Subject to the provisions of subordination, Write-Down and Cancellation, Going Concern Write-Down, or cancellation of interest payments (including Additional Amounts with respect thereto, if any) set forth in this Indenture or the Securities, in case there shall be pending judicial proceedings relative to the Company or any other obligor upon the Securities for its liquidation, the Trustee, irrespective of whether the principal of any Securities shall then be due and payable as therein expressed or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such judicial proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Securities of any series, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee, and its agents, attorneys and counsel, and for reimbursement of all liabilities and reasonable
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expenses incurred, and all advances made, by the Trustee, except as a result of negligence, bad faith or willful misconduct) and of the Securityholders allowed in any judicial proceedings relative to the Company or other obligor upon the Securities of any series, or to the creditors or property of the Company or such other obligor,
(b) unless prohibited by applicable law and regulations, to vote on behalf of the holders of the Securities of any series in any election of a liquidator, trustee, receiver or custodian in liquidation proceedings or person performing similar functions in comparable proceedings, and
(c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Securityholders and of the Trustee on their behalf; and any liquidator, trustee, receiver, custodian or other similar official is hereby authorized by each of the Securityholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to the Securityholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, and its agents, attorneys and counsel, and liabilities and reasonable expenses incurred, and all advances made, by the Trustee except as a result of negligence, bad faith or willful misconduct.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Securityholder any plan of liquidation affecting the Securities of any series or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding, except, as aforesaid, to vote for the election of a liquidator or similar person.
All rights of action and of asserting claims under this Indenture, or under any of the Securities, may be enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as Trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee and its respective agents and attorneys, shall be for the ratable benefit of the holders of the Securities in respect of which such action was taken.
In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the holders of the Securities in respect to which such action was taken, and it shall not be necessary to make any Holders of such Securities parties to any such proceedings.
For the avoidance of doubt, nothing in this Section shall be construed to impair the effectiveness of the interest cancellation provisions of Article 3, the subordination provisions of Article 12, the Write-Down and Cancellation provisions of Article 13 or the Going Concern Write-Down provisions of Article 14 of this Indenture or in the Securities.
Section 4.03 Application of Proceeds. Any moneys collected by the Trustee pursuant to this Article in respect of any series shall be applied, subject to Articles 3, 12, 13 and 14 hereof, in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal or interest, upon presentation of the several Securities in respect of which monies have been collected and stamping (or otherwise noting) thereon the payment, or issuing Securities of such series in reduced principal amounts in exchange for the presented Securities of like series if only partially paid, or upon surrender thereof if fully paid:
FIRST: Except as otherwise expressly provided herein, to the payment of costs, fees and expenses (including indemnity payments) applicable to such series in respect of which monies have been collected, including reasonable compensation (i) first, to the Trustee and its agents and attorneys and of all liabilities and reasonable expenses incurred, and all advances made, by the Trustee, and (ii) next to the Registrar, any Paying Agent and their respective agents and attorneys and of all liabilities and reasonable expenses incurred, and all advances made, by the Registrar and any Paying Agent;
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SECOND: In case the principal of the Securities of such series in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest on the Securities of such series with respect to which one or more breaches have occurred in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the installments of interest as to which such breaches have occurred at the same rate as the rate of interest provided for in such Securities, such payments to be made ratably to the persons entitled thereto, without discrimination or preference;
THIRD: In case the principal of the Securities of such series in respect of which moneys have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Securities of such series for principal and interest, with interest upon the principal as to which a breach has occurred, and (to the extent that such interest has been collected by the Trustee) upon installments of interest as to which breaches have occurred at the same rate as the rate of interest provided for in the Securities of such series; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such series, then to the payment of such principal and interest, without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, or of any Security of such series over any other Security of such series, ratably to the aggregate of such principal and accrued and unpaid interest; and
FOURTH: To the payment of the remainder, if any, to the Company or any other person lawfully entitled thereto.
Section 4.04 Suits for Enforcement. In case a breach has occurred, has not been waived and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. However, the Company shall not, as a result of the bringing of such judicial proceedings, be required to pay any amount representing or measured by reference to principal or interest on the Securities prior to any date on which the principal of, or any interest on, the Securities would have otherwise been payable pursuant to the terms of the Securities.
Unless otherwise established in accordance with Section 2.03 or by any applicable supplemental indenture, a “breach” with respect to Securities of any series wherever used herein means each one of the following events which shall have occurred and be continuing: (a) the Company’s failure to pay the principal, if, when and to the extent due, or, to pay the interest when due unless the Company determined to cancel such interest payment in respect of any series of the Securities, and the continuance of any such failure for a period of 30 days after the date when due, unless the Company shall have cured such failure by payment within such period, (b) the Company’s failure to duly perform or observe any other term, covenant or agreement in this Indenture in respect of the Securities of such series for a period of 90 days after the date on which written notice of such failure, requiring the Company to remedy the same, shall have been given first to the Company (and to the Trustee in the case of notice by the Holders referred to below) by the Trustee or Holders of at least 25% in Current Principal Amount of the Outstanding Securities of such series (such notification must specify the breach, demand that it be remedied and state that the notification is a “Notice of Breach” hereunder), or (c) any other breach provided in any applicable supplemental indenture or in or pursuant to a Board Resolution (and set forth in an Officer’s Certificate) under which such series of Securities is issued or in the form of Security for such series.
Section 4.05 Restoration of Rights on Abandonment of Proceeding. In case the Trustee or any Holder of a Security shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee or such Securityholder, then and in every such case the Company and the Trustee or such Securityholder shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Company, the Trustee and the Securityholders shall continue as though no such proceedings had been taken.
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Section 4.06 Limitations on Suits by Securityholders. No Holder of any Security of any series shall have any right by virtue or by availing of any provision of this Indenture or the Securities to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder or under the Securities, unless such Holder previously shall have given to the Trustee written notice of the breach and of the continuance thereof, as hereinbefore provided, and unless also the Holders of not less than 25% in Current Principal Amount of the Securities of the affected series then Outstanding (each such series treated as a single class) shall have made written request upon the Trustee to institute such action or proceedings in its own name as Trustee hereunder or under the Securities and shall have offered to the Trustee such security, indemnity and/or pre-funding satisfactory to the Trustee as it may require against the costs, expenses and liabilities to be incurred therein or thereby, the Trustee for 60 days after its receipt of such notice, request and offer of security, indemnity and/or pre-funding satisfactory to the Trustee shall have failed to institute any such action or proceeding, and no direction inconsistent with such written request shall have been given to the Trustee during such 60-day period pursuant to Section 4.09; it being understood and intended, and being expressly covenanted by the taker and Holder of every Security with every other taker and Holder and the Trustee, that no one or more Holders of Securities of any series shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture or the Securities to affect, disturb or prejudice the rights of any other such Holder of Securities, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right hereunder or under the Securities, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Securities of the applicable series. The rights of Holders specified above are subject to the limitations and suspension of rights resulting from cancellation of interest payment, subordination, or any event triggering any Going Concern Write-Down or Write-Down and Cancellation. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.
Section 4.07 Unconditional Right of Securityholders to Institute Certain Suits. Notwithstanding any other provision of this Indenture and any provision of any Security, the right of any Holder of any Security to receive payment of the principal of and any premium and interest on such Security (subject to Section 3.01), if any, on or after the respective due dates expressed in such Security, or to institute suit for the enforcement of any such payment, if any, on or after such respective dates, shall not be impaired or affected without the consent of such Holder. Notwithstanding the foregoing, by subscribing for, purchasing or otherwise acquiring the Securities, the Holders or beneficial owners of Securities agree to the limitations, suspension and waiver of rights resulting from cancellation of interest payment, subordination, or any event triggering any Going Concern Write-Down or Write-Down and Cancellation. For the avoidance of doubt, nothing in this Section shall be construed to impair the effectiveness of the Going Concern Write-Down, Write-Down and Cancellation, interest payment cancellation or subordination provisions set forth in this Indenture, the Securities or any applicable supplemental indenture hereto.
Section 4.08 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Breach. Except as provided in Section 4.06 and except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 2.09, no right or remedy herein conferred upon or reserved to the Trustee or to the Securityholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
No delay or omission of the Trustee or of any Securityholder to exercise any right or power accruing upon any breach occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such breach or an acquiescence therein; and, subject to Section 4.06, every power and remedy given by this Indenture or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders.
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Section 4.09 Control by Securityholders. The Holders of a majority in Current Principal Amount of the Securities of each series affected (with all such series voting as a single class) at the time Outstanding shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Securities of such series by this Indenture; provided that (1) such direction shall not be in conflict with any rule of law or with this Indenture, (2) the Trustee may refuse to follow any direction that may involve the Trustee in personal liability, (3) the Trustee may refuse to follow any direction that the Trustee determines in good faith may be unduly prejudicial to the rights of Securityholders not joining in the giving of such direction (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not any such directions are unduly prejudicial to such Securityholders), and (4) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.
Section 4.10 Waiver of Past Breach. The Holders of a majority in Current Principal Amount of the Securities of all series at the time Outstanding with respect to which a breach shall have occurred and be continuing (voting as a single class) may on behalf of the Holders of all such Securities waive any past breach and its consequences, except a breach in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Security affected. In the case of any such waiver, the Company, the Trustee and the Holders of all such Securities shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other breach or impair any right consequent thereon.
Upon any such waiver, such breach shall cease to exist and be deemed to have been cured and not to have occurred for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other breach or impair any right consequent thereon.
Section 4.11 Trustee to Give Notice of Breach. The Trustee shall give to the Securityholders of any series, as the names and addresses of such Holders appear on the Register, notice by mail (or by other means provided in a supplemental indenture hereto or the Board Resolution under which such series of Securities is issued or in the form of Security for such series) of all breaches and events which could lead to a breach known to the Trustee which have occurred with respect to such series, such notice to be transmitted within 90 days after the occurrence thereof, unless such breaches shall have been cured before the giving of such notice.
Section 4.12 Right of Court to Require Filing of Undertaking to Pay Costs. All parties to this Indenture agree, and each Holder of any Security by subscribing for, purchasing or otherwise acquiring such Security shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided that the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder or group of Securityholders of any series holding in the aggregate more than 10% in Current Principal Amount of the Securities of such series, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or interest on any Security on or after the due date expressed in such Security.
ARTICLE 5
CONCERNING THE TRUSTEE
Section 5.01 Duties and Responsibilities of the Trustee; Upon Breach; Prior to Breach. With respect to the Holders of any series of Securities issued hereunder, the Trustee, prior to the occurrence of a breach with respect to the Securities of a particular series of which a Responsible Officer of the Trustee has written notice or actual
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knowledge and after the curing or waiving of all such breach which may have occurred with respect to such series, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case a breach with respect to the Securities of a series has occurred (which has not been cured or waived) the Trustee shall exercise with respect to such series of Securities such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.
No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that
(a) prior to the occurrence of a breach with respect to the Securities of any series of which a Responsible Officer at the Trustee has written notice or actual knowledge and after the curing or waiving of all such breach in the payment of interest or principal or other breach with respect to such series which may have occurred:
(i) the duties and obligations of the Trustee with respect to the Securities of such series shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for its negligence, bad faith or willful misconduct in the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively without liability rely, and act or refrain from acting as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming with the requirements of this Indenture; provided that in the case of any such statements, certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of the mathematical calculations or other facts therein);
(b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be determined in a final non-appealable judgment or order by a court of competent jurisdiction that the Trustee was negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders pursuant to Section 4.09 (including but not limited to instructions given to it by any Holders that are deemed null and void and of no further effect following a Non-Viability Event, Bankruptcy Event or Capital Ratio Event) relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and
(d) under no circumstance shall the Trustee be liable in its individual capacity for the obligations evidenced by the Securities.
None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there shall be reasonable grounds for believing that the repayment of such funds or adequate indemnity, security and/or pre-funding satisfactory to it in its sole discretion against such liability is not reasonably assured to it.
The provisions of this Section are in furtherance of and subject to Section 315 and Section 316 of the Trust Indenture Act.
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Section 5.02 Certain Rights of the Trustee. In furtherance of and subject to the Trust Indenture Act, and subject to Section 5.01:
(a) in the absence of negligence, bad faith or willful misconduct on its part, the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, Officer’s Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officer’s Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any Board Resolution may be evidenced to the Trustee by a copy thereof certified by a Responsible Officer of the Company;
(c) the Trustee may consult with counsel, financial advisors and other professional advisors of its selection and any written advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders pursuant to the provisions of this Indenture, unless the requisite number of Securityholders shall have instructed the Trustee in writing in accordance with this Indenture and offered to the Trustee security, indemnity and/or pre-funding satisfactory to it in its sole discretion against the costs, expenses and liabilities which might be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture;
(f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority in Current Principal Amount of the Securities of all series affected then outstanding; provided that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require indemnity, security and/or pre-funding satisfactory to it against such expenses or liabilities as a condition to proceeding; and the reasonable expenses of every such investigation shall be paid by the Company or, if paid by the Trustee, shall be repaid by the Company upon demand;
(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, delegates or attorneys not regularly in its employ and the Trustee shall not be responsible for any loss, liability, cost, claim, action, demand or expense incurred by reason of omissions, misconduct or negligence on the part of any such agent, delegate or attorney appointed with due care by it hereunder;
(h) the Trustee shall not be deemed to have notice of any breach unless written notice of any event which is in fact such a breach is received by a Responsible Officer of the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture; delivery to the Trustee of Company financial reports shall not be deemed to constitute actual knowledge or constructive knowledge by the Trustee of its contents or notice of a breach;
(i) the Trustee may request that (and shall be entitled to receive) the Company deliver an Officer’s Certificate setting forth the names of the respective individuals and titles of officers authorized at such time to take specified actions pursuant to this Indenture with their specimen signatures, which Officer’s Certificate may be signed by any other person authorized to sign an Officer’s Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded;
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(j) the permissive rights of the Trustee enumerated herein shall not be construed as duties;
(k) in no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) whether or not foreseeable irrespective of whether the Trustee was advised of the likelihood of such loss or damage and regardless of the form of action. The provisions of this Section 5.02(k) shall survive the payment in full of the Securities, the termination or discharge of this Indenture and the resignation or removal of the Trustee;
(l) the Trustee shall not be under any duty to determine, calculate or verify any amount payable to Holders under this Indenture (including any write-down amounts) and with regard to the Securities and the Trustee will not be responsible to the Holders or any other person for any loss or liability arising from any failure by it to do so;
(m) the Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including without limitation, acts of God; earthquakes; fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority or governmental actions; acts of terrorism; failure of any money transmission currency exchange or SWIFT system; it being understood that the Trustee shall use its best efforts to resume performance as soon as practicable under the circumstances;
(n) the Trustee shall be entitled to take any action or to refuse to take any action which the Trustee regards as necessary for the Trustee to comply with any applicable law, regulation or fiscal requirement, court order, or the rules, operating procedures or market practice of any relevant stock exchange or other market or clearing system;
(o) notwithstanding anything else contained in this Indenture, the Trustee may refrain without liability from (i) doing anything which would or may in its opinion based upon advice of legal counsel be illegal or contrary to, or would result in the Trustee being in breach of, any law of any jurisdiction or any directive, rule, regulation, request, direction, notice, announcement or similar action of any agency, regulatory authority, stock exchange or self-regulatory organization of any jurisdiction (including, without limitation, Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act), or which would or might otherwise render it liable to any person and may do anything which is, in its opinion based upon advice of legal counsel, necessary to comply with any such law, directive or regulation or (ii) doing anything which may cause the Trustee to be considered a sponsor of a covered fund under Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any regulations promulgated thereunder. Furthermore, the Trustee may also refrain from taking any action if, in its opinion based upon advice of legal counsel, it would not have the power to do the relevant thing in the relevant jurisdiction by virtue of any applicable law in such jurisdiction or if it is determined by any court or other competent authority in such jurisdiction that it does not have such power; provided, however, that the Trustee shall promptly inform the Company if it refrains from acting pursuant to Sections 5.02(n) and 5.02(o) under this Indenture;
(p) the Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder;
(q) the Trustee shall treat information provided hereunder as confidential, but (unless consent is prohibited by applicable law, regulatory authority, court or legal process) the Company hereby consents to the processing, transfer and disclosure by the Trustee of any information relating to it provided hereunder to and between branches, subsidiaries, representative offices, affiliates and agents of the Trustee solely in connection with the discharge of the Trustee’s trusts, powers, authorities, duties and obligations hereunder, wherever situated, for confidential use (including to service providers selected by the Trustee with due care for data processing, statistical and risk analysis purposes and for compliance with applicable law). The Trustee and any such branch, subsidiary, representative office, affiliate, agent or third party, exercising due care, may transfer and disclose any such information only to the extent required or requested by any
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applicable law, regulatory authority, court or legal process, including any auditor of the Company and including any payor or payee as required by applicable law, and may use (and its performance will be subject to the rules of) any communications, clearing or payment systems, intermediary bank or other system. The Company acknowledges that the transfers permitted by this Section 5.02(q) may include transfers to jurisdictions which do not have strict data protection or data privacy laws;
(r) the Company hereby irrevocably waives, in favor of the Trustee, any conflict of interest that may arise by virtue of the Trustee acting for other customers of the Trustee. The Company acknowledges that the Trustee and its respective affiliates (together, the “Trustee Parties”) may have interests in, or may be providing or may in the future provide financial or other services to other parties with interests which the Company may regard as conflicting with its interests and may possess information (whether or not material to the Company) other than as a result of the Trustee acting as the Trustee hereunder that the Trustee may not be entitled to share with the Company. The Trustee and will not disclose confidential information obtained from the Company (without its consent) to any of the Trustee’s other customers or affiliates nor will it use on behalf of the Company any confidential information obtained from any other customer. Without prejudice to the foregoing, the Company agrees that the Trustee Parties may deal (whether for its own or its customers’ account) in, or advise on, securities of any party and that such dealing or giving of advice, will not constitute a conflict of interest for the purposes of the Securities or this Indenture;
(s) in the event the Trustee receives inconsistent or conflicting requests and indemnity, security and/or pre-funding from two or more groups of Holders, each representing less than a majority in aggregate principal amount of the Outstanding Securities of each series affected, consistent with the provisions of this Indenture, the Trustee may determine what action, if any, will be taken;
(t) in connection with the exercise by it of its trusts, powers, authorities or discretions (including, without limitation, any modification, waiver, authorization or determination), the Trustee shall have regard to the general interests of the Holders of the Securities of each series affected as a class but shall not have regard to any interests arising from circumstances particular to individual Holders (whatever their number) and in particular, but without limitation, shall not have regard to the consequences of the exercise of its trusts, powers, authorities or discretions for individual Holders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any country, state or territory and a Holder shall not be entitled to require, nor shall any Holder be entitled to claim, from the Company, the Trustee or any other Person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Holders except to the extent already provided in Section 3.05 and/or any undertaking given in addition to, or in substitution for, Section 3.05 pursuant to this Indenture; and
(u) all calculations relating to the Securities shall be performed by the Company or any other person appointed by it for this purpose. The Trustee shall not be liable in any respect for the accuracy or inaccuracy in any calculation or formula hereunder or under the Securities, whether by the Company, the auditors or any other person so appointed by any of them for such purpose.
Section 5.03 Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof. The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Securities. The Trustee shall not be accountable for the use or application by the Company of any of the Securities or of the proceeds thereof, nor for the action or inaction of any Clearing Organization.
Section 5.04 Trustee and Agents May Hold Securities; Collections, etc. The Trustee or any agent of the Company or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not the Trustee or such agent and may otherwise deal with the Company and receive, collect, hold and retain collections from the Company with the same rights it would have if it were not the Trustee or such agent.
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Section 5.05 Moneys Held by Trustee. Subject to the provisions of Section 9.03, Section 12.12, Section 13.07 and Section 14.09, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust by the Trustee for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the Company or the Trustee shall be under any liability for interest on any moneys received by it hereunder, nor have any responsibility to invest such moneys, except as otherwise agreed in writing by the Trustee with the Company.
Section 5.06 Compensation and Indemnification of Trustee and its Prior Claim. The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such reasonable compensation as the Company and the Trustee shall from time to time agree in writing (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Company covenants and agrees to pay or reimburse the Trustee and each predecessor trustee upon its request for all properly incurred expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including, subject to Section 5.02(g), the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except to the extent any such expense, disbursement or advance may arise from its negligence, bad faith or willful misconduct as determined in a final non-appealable judgment or order by a court of competent jurisdiction. The Company also covenants to indemnify the Trustee, which for purposes of this Section shall be deemed to include the Trustee’s directors, officers, employees and agents, and each predecessor trustee (and their respective officers, employees, directors and agents) for, and to hold it harmless against, any loss, liability or expense (including taxes other than taxes based upon the net income of the Trustee) arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and the performance of its duties hereunder, including the properly incurred costs and expenses (including the properly incurred fees, charges and expenses of its agents and counsel) of defending itself against or investigating any claim of liability arising out of or in connection with the same, except to the extent such loss, liability or expense may be attributable to the negligence, bad faith or willful misconduct of the Trustee, its agents, officers, directors or employees or such predecessor trustee, in each case as determined in a final non-appealable judgment or order by a court of competent jurisdiction. The obligations of the Company under this Section to compensate and indemnify the Trustee and each predecessor trustee and to pay or reimburse the Trustee and each predecessor trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the resignation or removal of the Trustee, the payment in full of the Securities and the termination and discharge of this Indenture. Such additional indebtedness shall be a senior claim to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held by the Trustee in trust for the benefit of the holders of particular Securities, and the Securities are hereby subordinated to such senior claim.
When the Trustee incurs expenses or renders services in connection with a Liquidation Event or breach, the expenses (including the properly incurred fees and expenses of its agents and counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable bankruptcy, insolvency or other similar law.
The Trustee’s remuneration and that of its agents and counsel is exclusive of value-added tax or any similar tax, which if applicable is also payable by the Company to the Trustee. All remuneration payable to the Trustee shall accrue interest from the date when payment was due. All amounts payable to the Trustee shall be made without set-off, counterclaim, deduction or withholding unless required by law, in which case (other than in respect of taxes based upon, measured by or determined by the income of the Trustee) the Company shall gross up such payments to the Trustee.
The indemnity set forth herein shall survive final payment in full of the Securities, the termination or discharge of this Indenture, and the resignation or removal of the Trustee or any agent hereunder.
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Section 5.07 Right of Trustee to Rely on Officer’s Certificate, etc. Subject to Sections 5.01 and 5.02, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence, bad faith or willful misconduct on the part of the Trustee, be deemed to be conclusively proved and established by an Officer’s Certificate and/or an Opinion of Counsel delivered to the Trustee, and such certificate, in the absence of negligence, bad faith or willful misconduct on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture to the extent of the Trustee’s reliance thereupon.
Section 5.08 Persons Eligible for Appointment as Trustee. The Trustee for each series of Securities hereunder shall at all times be a Person that is eligible in accordance with the provisions of Section 310(a) of the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee or any trustee hereafter appointed shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect specified in Section 5.09.
Section 5.09 Resignation and Removal; Appointment of Successor Trustee.
(a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign with respect to one or more or all series of Securities by giving 60 days written notice of resignation to the Company and by mailing notice thereof by first-class mail to Holders of the applicable series of Securities at their last addresses as they shall appear on the Register or otherwise providing notice to Holders in the manner applicable to the Securities of each series. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee or trustees with respect to the applicable series by written instrument in duplicate, executed by authority of the Board, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee or trustees. If no successor trustee shall have been so appointed with respect to any series and have accepted appointment within 30 days after the mailing of such notice of resignation or removal (as the case may be), the resigning trustee may, on behalf of and at the expense of the Company, appoint its successor or the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Securityholder who has been a bona fide Holder of a Security or Securities of the applicable series for at least six months may, subject to the provisions of Section 4.12, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of Section 310(b) of the Trust Indenture Act with respect to any series of Securities and shall fail to resign after written request therefor by the Company or by any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 310(a) of the Trust Indenture Act and shall fail to resign after written request therefor by the Company or by any Securityholder; or
(iii) the Trustee shall become incapable of acting with respect to any series of Securities, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation;
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then, in any such case, the Company may remove the Trustee with respect to the applicable series of Securities and appoint a successor trustee for such series by written instrument, in duplicate, executed by order of the Board, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to Section 315(e) of the Trust Indenture Act, any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee with respect to such series. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee.
(c) The Holders of a majority in Current Principal Amount of the Securities of each series at the time Outstanding may at any time remove the Trustee with respect to Securities of such series and appoint a successor trustee with respect to the Securities of such series by delivering to the Trustee so removed, to the successor trustee so appointed and to the Company the evidence provided for in Section 6.01 of the action in that regard taken by the Securityholders.
(d) Any resignation or removal of the Trustee with respect to any series and any appointment of a successor trustee with respect to such series pursuant to any of the provisions of this Section shall become effective upon acceptance of appointment by the successor trustee as provided in Section 5.10.
Section 5.10 Acceptance of Appointment by Successor Trustee. Any successor trustee appointed as provided in Section 5.09 shall execute and deliver to the Company and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee with respect to all or any applicable series shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations with respect to such series of its predecessor hereunder, with like effect as if originally named as trustee for such series hereunder; but, nevertheless, on the written request of the Company or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 9.03, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 5.06.
If a successor trustee is appointed with respect to the Securities of one or more (but not all) series, the Company, the predecessor trustee and each successor trustee with respect to the Securities of any applicable series shall execute and deliver an indenture supplemental hereto which shall contain such provisions as (i) shall be necessary or desirable to transfer and confirm to, and to vest in, each successor trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor trustee relates, (ii) shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor trustee with respect to the Securities of any series as to which the predecessor trustee is not retiring shall continue to be vested in the predecessor trustee, and (iii) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such trustees co-trustees of the same trust and that each such trustee shall be trustee of a trust or trusts under separate indentures; and upon the execution and delivery of such supplemental indenture the resignation or removal of the predecessor trustee shall become effective to the extent provided therein and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations with respect to such series of its predecessor hereunder, with like effect as if originally named as trustee for such series hereunder; but, nevertheless, on the written request of the Company or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 9.03, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations.
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No successor trustee shall accept its appointment unless at the time of such acceptance such successor trustee for the Securities of any series is eligible pursuant to Section 5.08.
Upon acceptance of appointment by any successor trustee as provided in this Section, the Company shall mail notice thereof by first-class mail to the Holders of Securities of any series for which such successor trustee is acting as trustee at their last addresses as they shall appear in the Register or shall otherwise provide notice thereof to Holders in the manner applicable to the Securities of each series. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 5.09. If the Company fails to mail or provide such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed or provided at the expense of the Company.
Section 5.11 Merger, Conversion, Consolidation or Succession to Business of Trustee. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be eligible under the provisions of Section 5.08, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture and any of the Securities of any series shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee and deliver such Securities so authenticated; and, in case at that time any of the Securities of any series shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Securities of such series or in this Indenture provided that the certificate of the Trustee shall have; provided that the right to adopt the certificate of authentication of any predecessor trustee or to authenticate Securities of any series in the name of any predecessor trustee shall apply only to its successor or successors by merger, conversion or consolidation.
Section 5.12 Conflicting Interests. The Trustee for the Securities shall be subject to the provisions of Section 310(b) of the Trust Indenture Act during the period of time required thereby. Nothing herein shall prevent the Trustee from filing with the Commission the application referred to in the penultimate paragraph of Section 310(b) of the Trust Indenture Act. In determining whether the Trustee has a conflicting interest as defined in Section 310(b) of the Trust Indenture Act with respect to the Securities of any series, there shall be excluded Securities of any particular series of Securities other than that series.
Section 5.13 Appointment of Authenticating Agent. The Trustee may appoint an Authenticating Agent or agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a Person that is eligible pursuant to the Trust Indenture Act to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.
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Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of Securities of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Register.
Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time such reasonable compensation for its services under this Section as may be agreed between the Company and such Authenticating Agent.
If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternate certificate of authentication in the following form:
Certificate of Authentication:
This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture.
| Date: |
| Citibank, N.A. as Trustee | ||
| By: | ||
| Name: | ||
| Title: | ||
Section 5.14 Reports by the Trustee. Any Trustee’s report required under Section 313(a) of the Trust Indenture Act shall be transmitted on or before April 1 in each year following the date hereof, so long as any Securities are Outstanding hereunder, and shall be dated as of a date convenient to the Trustee no more than 60 nor less than 45 days prior thereto. A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with any securities exchange in the United States on which any Securities are listed, with the Commission and with the Company.
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ARTICLE 6
CONCERNING THE SECURITYHOLDERS
Section 6.01 Evidence of Action Taken by Securityholders. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by a specified percentage in principal amount of the Securityholders of any or all series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of Securityholders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 5.01 and 5.02) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Article.
Section 6.02 Proof of Execution of Instruments and of Holding of Securities; Record Date. Subject to Sections 5.01 and 5.02, the execution of any instrument by a Securityholder or his agent or proxy may be proved in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The holding of Securities shall be proved by the Register or by a certificate of the Registrar thereof. The Company may set a record date for purposes of determining the identity of holders of Securities of any series entitled to vote or consent to any action referred to in Section 6.01, which record date may be set at any time or from time to time by notice to the Trustee, for any date or dates (in the case of any adjournment or reconsideration) not more than 60 days nor less than ten days prior to the proposed date of such vote or consent, and thereafter, notwithstanding any other provisions hereof, only holders of Securities of such series of record on such record date shall be entitled to so vote or give such consent or revoke such vote or consent; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. With respect to any record date set pursuant to this Section, the Company may designate any day as the “Expiration Date” and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the Trustee in writing, and to each Holder of Securities of the relevant series in the manner set forth in Section 10.04, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the Company shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date.
Section 6.03 Holders to be Treated as Owners. The Company, the Trustee and any agent of the Company or the Trustee may deem and treat the person in whose name any Security shall be registered upon the Register for such series as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and, subject to the provisions of this Indenture, interest on such Security and for all other purposes; and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by any notice to the contrary. All such payments so made to any such person, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Security.
Section 6.04 Securities Owned by Company Deemed Not Outstanding. In determining whether the Holders of the requisite Current Principal Amount of Outstanding Securities of any or all series have concurred in any direction, consent or waiver under this Indenture, Securities which are owned by the Company or any other obligor on the Securities with respect to which such determination is being made or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Securities with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of
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determining whether the Trustee shall be protected in relying on any such direction, consent or waiver only Securities in respect of which a Responsible Officer of the Trustee has received written notice shall be so disregarded. Securities held by any depositary or other custodial arrangement established by or on behalf of the Company shall be regarded as Outstanding if the beneficial interest therein is not owned by the Company or any other obligor on such Securities or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on such Securities. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Securities. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any reasonable decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Company shall furnish to the Trustee promptly an Officer’s Certificate listing and identifying all Securities, if any, known by the Company to be owned or held by or for the account of any of the above-described persons; and, subject to Sections 5.01 and 5.02, the Trustee shall be entitled to accept such Officer’s Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination.
Section 6.05 Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 6.01, of the taking of any action by the Holders of the percentage in Current Principal Amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action, any Holder of a Security the serial number of which is shown by the evidence to be included among the serial numbers of the Securities the Holders of which have consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Security. Except as aforesaid, any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security and of any Securities issued in exchange or substitution therefor or on registration of transfer thereof, irrespective of whether or not any notation in regard thereto is made upon any such Security. Any action taken by the Holders of the percentage in Current Principal Amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the Holders of all the Securities affected by such action.
ARTICLE 7
SUPPLEMENTAL INDENTURES
Section 7.01 Supplemental Indentures Without Consent of Securityholders. The Company, when authorized by a Board Resolution, and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto for one or more of the following purposes:
(a) to evidence the succession of another legal entity to the Company, or successive successions, and the assumption by a successor legal entity of the covenants, agreements and obligations of the Company pursuant to Article 8;
(b) to add to the covenants of the Company such further covenants, restrictions, conditions or provisions as the Company shall consider to be for the protection of the Holders of Securities, and to make the occurrence, or the occurrence and continuance, of a failure by the Company to comply with any such additional covenants, restrictions, conditions or provisions a breach permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, that a breach of any such additional covenant, restriction, condition or provision may not be a basis for acceleration;
(c) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture; to correct any manifest error contained herein or in any supplemental
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indenture; or to make such other provisions in regard to matters or questions arising under this Indenture or under any supplemental indenture as the Board may deem necessary or desirable and which shall not adversely affect the interests of the Holders of the Securities in any material respect;
(d) to add to, change or eliminate any of the provisions (other than as noted in Section 7.02) of this Indenture, provided, however, that any such addition, change or elimination shall not adversely affect the interests of the Holders of the Securities in any material respect;
(e) to add to, change or eliminate any of the provisions of this Indenture for the purpose of reflecting any change in the procedures relating to Japanese withholding tax resulting from any amendment to the applicable Japanese tax law, provided that such amendment is relevant to any series of Securities;
(f) to establish the form or terms of Securities of any series as permitted by Section 2.01 and Section 2.03;
(g) to evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Section 5.10;
(h) remove, amend or modify the going-concern, non-viability or bankruptcy write-down provisions or the cancellation of interest payment provisions, including the provisions of Section 3.10, Section 3.11 and Articles 13 and 14 and any relevant provisions of any form of Security or indenture supplemental hereto; provided, however, that such removal, amendment or modification does not adversely affect the interests of the holders of the Securities in any material respect or the treatment of the Securities as the Company’s Additional Tier 1 Capital; or
(i) effect any changes in a manner necessary to comply with the procedures of DTC, Euroclear or Clearstream or any applicable clearing system.
The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise. The Trustee, at the expense of the Company, shall be entitled to receive an Officer’s Certificate and an Opinion of Counsel with regard to any such supplemental indenture. The Trustee shall be entitled to conclusively rely upon such Officer’s Certificate and Opinion of Counsel in entering into such supplemental indenture. The Opinion of Counsel shall comply with Section 10.05 and confirm (inter alia) that the supplemental indenture is authorized or permitted under this Indenture, and that it is legal, valid, binding and enforceable against the Company under New York law.
Any supplemental indenture authorized by the provisions of this Section may be executed without the consent of the Holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 7.02.
Section 7.02 Supplemental Indentures With Consent of Securityholders. With the consent (evidenced as provided in Article 6) of the Holders of not less than a majority in Current Principal Amount of the Securities at the time Outstanding of all series affected by such supplemental indenture (with each such series voting as one class), the Company, when authorized by a Board Resolution, and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities of each such series; provided, that no such supplemental indenture shall, without the consent of the Holders of each Security so affected and except as otherwise required or permitted pursuant to the Going Concern Write-Down, Write-Down and Cancellation, interest payment cancellation, or subordination provisions applicable to such series of Securities, (i) reduce the
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principal amount (other than upon the occurrence of a Capital Ratio Event, Non-Viability Event, Bankruptcy Event or Liquidation Event), the interest rate (other than upon the occurrence of a Capital Ratio Event, Non-Viability Event, Bankruptcy Event, Liquidation Event, or due to the cancellation of interest as provided in this Indenture) or the redemption price (other than upon the occurrence of a Capital Ratio Event, Non-Viability Event or Bankruptcy Event, Liquidation Event as provided in this Indenture) therefor, (ii) permit redemption thereof if not previously permitted, (iii) impair any right a holder may have to require repayment of its Security, (iv) impair any right that a holder of an indexed or any other Security may have to convert the Security for or into securities, (v) change the currency of any payment thereon, (vi) change the place of payment thereon, (vii) modify or amend any provisions relating to the agreement to subordinate and the terms of subordination of the Securities of any particular series pursuant to Sections 12.01 and 12.02, (viii) remove, amend or modify the going-concern, non-viability or bankruptcy write-down provisions or the cancellation of interest payment provisions, including the provisions of Section 3.10, Section 3.11 and Articles 13 and 14, in a manner not expressly permitted to be accomplished without obtaining the consent of the Holders, (ix) impair the right of any Holder to sue for payment of any amount due on any Security when due, (x) reduce the percentage of Securities of any one or more affected series, taken separately or together, as applicable, and whether comprising the same or different series or less than all of the Securities of a series, the approval of whose Holders is needed to change the Indenture or those Securities, (xi) reduce the percentage in principal amount of the Securities of any one or more affected series, taken separately or together, as applicable, and whether comprising the same or different series or less than all of the Securities of a series, the consent of whose Holders is needed to waive the Company’s compliance with the Indenture or to waive breaches, (xii) change the provisions of this Indenture or any supplemental indenture dealing with modification and waiver in any other respect, except to increase any required percentage referred to above or to add to the provisions that cannot be changed or waived without approval of the Holder of each affected Security.
Notwithstanding anything else contained in this Indenture, no amendment or modification which is prejudicial to any present or future creditor in respect of any Senior Indebtedness shall be made to the provisions of Section 12.01, Section 12.02 or Section 12.03 or those providing for the subordination of any Securities in the relevant supplemental indenture. No such amendment or modification shall in any event be effective against any such creditor of Senior Indebtedness.
A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of holders of Securities of such series, with respect to such covenant or provision, shall be deemed not to affect the rights under this Indenture of the holders of Securities of any other series.
Upon the request of the Company, accompanied by a copy of the Board Resolution certified by a Responsible Officer of the Company authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders as aforesaid and other documents, if any, required by Section 6.01, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. The Trustee, at the expense of the Company, shall be entitled to receive an Officer’s Certificate and an Opinion of Counsel with regard to any such supplemental indenture. The Trustee shall be entitled to conclusively rely upon such Officer’s Certificate and Opinion of Counsel in entering into such supplemental indenture. The Opinion of Counsel shall comply with Section 10.05 and confirm (inter alia) that the supplemental indenture is authorized or permitted under this Indenture, and that it is legal, valid, binding and enforceable against the Company under New York law.
It shall not be necessary for the consent of the Securityholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.
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Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Company shall give notice thereof by (a) first-class mail to the Holders of Securities of each series affected thereby at their addresses as they shall appear on the Register or (b) by any other means set forth in such supplemental indenture, setting forth in general terms the substance of such supplemental indenture. The Trustee shall assist the Company with the distribution of the notices to the Holders. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.
Section 7.03 Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the Holders of Securities of each series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
Section 7.04 Documents to be Given to Trustee. The Trustee, subject to the provisions of Sections 5.01 and 5.02, shall be entitled to receive, in addition to the documents required by Section 10.05, an Officer’s Certificate and an Opinion of Counsel as conclusive evidence that, any supplemental indenture executed pursuant to this Article complies with the applicable provisions of this Indenture.
Section 7.05 Notation on Securities in Respect of Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Trustee for such series as to any matter provided for by such supplemental indenture or as to any action taken by Securityholders. If the Company or the Trustee shall so determine, new Securities of any series so modified as to conform, in the opinion of the Board, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Company, authenticated by the Trustee and delivered in exchange for the Securities of such series then Outstanding.
Section 7.06 Conformity with the Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect.
ARTICLE 8
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 8.01 Company May Consolidate, etc., on Certain Terms. The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless:
(a) in case the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a corporation, partnership or trust, shall be organized and validly existing under the laws of any domestic or foreign jurisdiction and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment, if and to the extent required, of the principal of and any premium and interest on all the Securities, and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed; and
(b) immediately after giving effect to such transaction, no Bankruptcy Event, and no event which, after notice or lapse of time or both, would become a Bankruptcy Event, shall have occurred and be continuing.
The Company shall deliver to the Trustee before the consummation of such proposed transaction an Officer’s Certificate to the foregoing effect and an Opinion of Counsel to the effect that (i) such consolidation,
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merger, conveyance, transfer or lease and such supplemental indenture, comply with this Indenture, (ii) the surviving Person has duly executed and delivered the supplemental indenture and (iii) such supplemental indenture constitutes a valid and binding agreement of such Person, enforceable against such Person in accordance with its terms. The Trustee shall be entitled to rely conclusively upon such Officer’s Certificate and Opinion of Counsel.
Section 8.02 Successor Substituted. In case of any such consolidation, merger, sale or conveyance, and following such an assumption by the successor legal entity, such successor legal entity shall succeed to and be substituted for the Company, with the same effect as if it had been named herein. Such successor legal entity may cause to be signed, and may issue either in its own name or in the name of the Company prior to such succession, any or all of the Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor legal entity instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities which such successor legal entity thereafter shall cause to be signed and delivered to the Trustee for that purpose. All of the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, lease or conveyance such changes in phrasing and form (but not in substance) may be made in the Securities thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a conveyance by way of lease) the Company or any successor legal entity which shall theretofore have become such in the manner described in this Article shall be discharged from all obligations and covenants under this Indenture and the Securities and may be liquidated and dissolved.
Section 8.03 Opinion of Counsel to Trustee. The Trustee, subject to the provisions of Section 5.01 and Section 5.02, shall be entitled to receive an Opinion of Counsel, prepared in accordance with Section 10.05, as conclusive evidence that any such consolidation, merger, sale, lease or conveyance, and any such assumption, and any such liquidation or dissolution, complies with the applicable provisions of this Indenture.
ARTICLE 9
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
Section 9.01 Satisfaction and Discharge of Indenture. When (i) the Company has redeemed all Securities of a series Outstanding under this Indenture in connection with the redemption provisions pursuant to Section 11.02, Section 11.03 or Section 11.04, (ii) the Company shall have delivered to the Trustee, the Paying Agent or Registrar, as applicable, for cancellation all Securities of any series theretofore authenticated (other than any Securities of such series which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.09), or (iii) all Securities of a series Outstanding under this Indenture shall have been cancelled in connection with a Write-Down and Cancellation upon occurrence of a Non-Viability Event or Bankruptcy Event pursuant to Article 13, then this Indenture shall cease to be of further effect with respect to Securities of such series, and the Trustee, on prior written demand of the Company accompanied by an Officer’s Certificate and an Opinion of Counsel and at the cost and expense of the Company, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture with respect to such series; provided, that the rights of Holders of the Securities to receive amounts in respect of principal of and interest on the Securities held by them shall not be delayed longer than required by then-applicable mandatory rules or policies of any securities exchange upon which the Securities are listed. The Company agrees to reimburse the Trustee for any costs or expenses thereafter properly incurred and to compensate the Trustee for any services thereafter properly rendered by the Trustee in connection with this Indenture or the Securities of such series.
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Section 9.02 Application by Trustee of Funds Deposited for Payment of Securities. Subject to Section 9.03 and any subordination provisions applicable to the Securities, all moneys deposited with the Trustee shall be held by the Trustee in trust and applied by it to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent), to the Holders of the particular Securities of such series for the payment or redemption of which such moneys have been deposited with the Trustee of all sums due and to become due thereon for principal and interest pursuant to such Securities and this Indenture; but such money need not be segregated from other funds except to the extent required by law.
Section 9.03 Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture with respect to Securities of any series, all moneys then held by any Paying Agent under the provisions of this Indenture with respect to such series of Securities shall, upon demand of the Company, be repaid to it or paid to the Trustee and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.
Section 9.04 Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years. Any moneys deposited with or paid to the Trustee or any Paying Agent for the payment of the principal of or interest on any Security of any series and not applied but remaining unclaimed for two years after the date upon which such principal or interest shall have become due and payable, shall, upon the prior written request of the Company and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Company by the Trustee for such series or such Paying Agent, and the Holder of the Security of such series shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Company for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any Paying Agent with respect to such moneys shall thereupon cease.
ARTICLE 10
MISCELLANEOUS PROVISIONS
Section 10.01 Incorporators, Stockholders, Officers and Directors of Company Exempt from Individual Liability. No recourse under or upon any obligation, covenant or agreement contained in this Indenture, or in any Security, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such, or against any past, present or future stockholder, member, officer, director or employee, as such, of the Company, or of any successor, either directly or through the Company or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities by the holders thereof and as part of the consideration for the issue of the Securities.
Section 10.02 Provisions of Indenture for the Sole Benefit of Parties and Securityholders. Nothing in this Indenture or in the Securities, expressed or implied, shall give or be construed to give to any Person other than the parties hereto and their successors, the Holders of Senior Indebtedness and the Holders of the Securities, any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors, the holders of Senior Indebtedness and of the Holders of the Securities.
Section 10.03 Successors and Assigns of Company Bound by Indenture. All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of the Company shall bind its successors and assigns, whether so expressed or not.
Section 10.04 Notices and Demands on Company, Trustee and Securityholders. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or the Holders of Securities to or on the Company shall be in the English language and shall be given or served by being deposited postage prepaid, first-class or similar class mail (except as otherwise specifically provided
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herein) or by facsimile addressed (until another address of the Company is filed by the Company with the Trustee) at the following address:
Company:
Nomura Holdings, Inc.
13-1, Nihonbashi 1-chome, Chuo-ku
Tokyo 103-8645
Japan
Attention: Treasury and Capital Management Department
Fax: +81-3-6702-7850
Any notice, direction, request or demand by the Company or any Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing in the English language to its Corporate Trust Office.
Where this Indenture provides for notice to Holders of Registered Securities, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Register. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Company and Holders of Registered Securities when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be reasonably satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice.
Any notice or demand will be deemed to have been sufficiently given or served when so sent or deposited and, if to the Holders, when delivered in accordance with the applicable rules and procedures of the Clearing Organization. Notwithstanding anything to the contrary herein, any such notice, which is purported to be made to the beneficial owner of the Securities through the Clearing Organization, may be delivered to the Clearing Organization in a manner the Company deems appropriate, and shall be deemed to have been delivered on the day such notice is delivered to the Clearing Organization, or if by mail, when so sent or deposited.
Section 10.05 Officer’s Certificates and Opinions of Counsel; Statements to be Contained Therein. Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officer’s Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with.
All such Officer’s Certificates and Opinions of Counsel shall be in English or accompanied by a certified translation.
Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the person making such certificate or opinion has read such covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (c) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.
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Any certificate, statement or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters, information with respect to which is in the possession of the Company, upon the certificate, statement or opinion of or representations by an officer of officers of the Company, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Company or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Company, as the case may be, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.
Section 10.06 Conflict of any Provision of Indenture with Trust Indenture Act. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with another provision of this Indenture by operation of Sections 310 to 317, inclusive, of the Trust Indenture Act (an “Incorporated Provision”), such Incorporated Provision shall control.
Section 10.07 New York Law to Govern. This Indenture and each Security shall be deemed to be a contract under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of such State.
Section 10.08 Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.
Section 10.09 Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.
Section 10.10 Submission To Jurisdiction. To the fullest extent permitted by applicable law, the Company irrevocably submits to the non-exclusive jurisdiction of any Federal or State court in the Borough of Manhattan in The City of New York, County and State of New York, United States of America, in any suit or proceeding based on or arising under this Indenture and the Securities, and irrevocably agrees that all claims in respect of such suit or proceeding may be determined in any such court. The Company, to the fullest extent permitted by applicable law, irrevocably and fully waives the defense of an inconvenient forum to the maintenance of such suit or proceeding and hereby irrevocably designates and appoints Nomura Holding America Inc., with offices currently at Worldwide Plaza, 309 West 49th Street, New York, New York 10019-7316 (Attention: Legal Department), as its authorized agent (the “Authorized Agent”) upon whom process may be served in any such suit or proceeding. The Company represents that it has notified the Authorized Agent of such designation and appointment and that the Authorized Agent has accepted the same. The Company hereby irrevocably authorizes and directs its Authorized Agent to accept such service. The Company further agrees that service of process upon its Authorized Agent and written notice of said service to it mailed by first-class mail or delivered to the Company shall be deemed in every respect effective service of process upon it in any such suit or proceeding. Nothing herein shall affect the right of any person to serve process in any other manner permitted by law. The Company agrees that a final action in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other lawful manner.
The Company hereby irrevocably waives, to the extent permitted by law, any immunity to jurisdiction to which it may otherwise be entitled (including, without limitation, immunity to pre-judgment attachment, post-
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judgment attachment and execution) in any legal suit, action or proceeding against it arising out of or based on this Indenture, the Securities or the transactions contemplated hereby.
The provisions of this Section are intended to be effective upon the execution of this Indenture without any further action by the Company or the Trustee and the introduction of a true copy of this Indenture into evidence shall be conclusive and final evidence as to such matters.
Section 10.11 Non-Business Day. In any case where the date of payment of interest or redemption of a Security established in accordance with Section 2.03 shall not be a Business Day at any Place of Payment with respect to Securities of that series, then (unless otherwise specified in the Securities) payment of principal of and interest, if any, with respect to such Security need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the date of payment of interest or redemption of a Security established in accordance with Section 2.03, provided that no interest shall accrue for the period from and after such date of payment of interest or redemption of a Security, as the case may be.
Section 10.12 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 10.13 Patriot Act. The parties hereto acknowledge that, in accordance with Section 326 of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (as amended, modified or supplemented from time to time, the “USA Patriot Act”), the Trustee, like all financial institutions, is required to obtain, verify, and record information that identifies each person or legal entity that opens an account. The parties to this Indenture agree that they will provide the Trustee with such information as the Trustee may request in order for the Trustee to satisfy the requirements of the USA Patriot Act.
ARTICLE 11
REDEMPTION AND REPURCHASE OF SECURITIES
Section 11.01 Applicability of Article. The provisions of this Article shall be applicable to the Securities of any series which are redeemable except as otherwise specified as contemplated by Section 2.03 for Securities of such series. Notwithstanding anything to the contrary contained in the terms of the Securities, any redemption under the Securities shall be subject to the going concern, non-viability or bankruptcy write-down provisions, the interest cancellation provisions, the subordination provisions, each as provided herein, including the provisions of Section 3.10, Section 3.11 and Articles 12, 13 and 14.
Section 11.02 Optional Redemption. Unless otherwise specified as contemplated by Section 2.03 with respect to any series of Securities, a series of Securities may, subject to prior confirmation of the FSA (if such confirmation is required under the Applicable Capital Adequacy Regulations), be redeemed at the option of the Company, in whole but not in part, on the interest rate reset date occurring on or after the fifth year anniversary of the issuance of such series of Securities or on the interest rate reset dates occurring on each five-year anniversary of such interest rate reset date thereafter, each specified pursuant to Section 2.03 relating to such series, upon not less than 25 days’ nor more than 60 days’ prior notice to the Trustee (unless a shorter or longer notice period is specified in the terms of a particular series of Securities pursuant to Section 2.03) and the Trustee, at a redemption price equal to 100% of the Original Principal Amount of the Securities (together with accrued and unpaid interest through but excluding the date fixed for redemption and Additional Amounts, if any); provided, however, that the Company shall not have such option to redeem the Securities, as provided in this Section, if the Current Principal Amount of the Securities has been subject to one or more Going Concern Write-Downs and such written down amount has not be reinstated in full on the date fixed for redemption.
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Section 11.03 Optional Redemption Due to Changes in Tax Treatment. Unless otherwise specified as contemplated by Section 2.03 for a particular series of Securities, the Company may, subject to prior confirmation of the FSA (if such confirmation is required under Applicable Capital Adequacy Regulations), on giving at least 25 days’, but not more than 60 days’, notice to the Trustee (which notice shall be irrevocable), redeem all, but not less than all, of the Securities of such series then outstanding at a redemption price equal to 100% of the Current Principal Amount of the relevant series of the Securities on the date fixed for redemption (together with accrued and unpaid interest through but not including the date fixed for redemption and any related Additional Amounts), in each case with respect to the Securities being redeemed, in the event that the Company determines that, as a result of any change in or amendment to the laws or treaties (or any regulations or rulings promulgated thereunder) of Japan or any political subdivision or authority thereof or therein having power to tax, or any change in official position regarding the application or interpretation of such laws, treaties, regulations or rulings (including a holding, judgment or order by a court of competent jurisdiction), which change or amendment becomes effective on or after the date of the final offering document for the relevant series of Securities, (i) the Company is or on the next interest payment date would become obligated to pay Additional Amounts with respect to the Securities of such series or (ii) any interest on the Securities ceases to be treated as being a deductible expense for the purpose of the Company’s corporate tax (and, in each case of (i) or (ii) above, such obligation cannot be avoided through the taking of reasonable measures available to the Company). The Trustee will notify the Holders at least 25 days prior to the date fixed for any such redemption. Prior to the Company’s giving of any notice of redemption for tax reasons as described in this paragraph, the Company shall deliver to the Trustee (i) an Officer’s Certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Company to so redeem have occurred and (ii) an opinion of legal counsel or tax advisor of recognized standing to such effect based on such statement of facts; provided that no such notice of redemption shall be given earlier than 60 days prior to the earliest date on which (x) the Company would be obligated to pay such Additional Amounts if a payment in respect of the Securities were then due or (y) any interest on the Securities ceases to be treated as being a deductible expense for the purpose of the Company’s corporate tax, as the case may be.
Section 11.04 Optional Redemption Due to Changes in Regulatory Treatment. Unless otherwise established in accordance with Section 2.03, the Securities of any series may, subject to prior confirmation of the FSA (if such confirmation is required under the Applicable Capital Adequacy Regulations), be redeemed at the option of the Company, in whole, but not in part, at any time, upon notice thereof given by the Company to the Trustee not less than 25 days and not more than 60 days prior to the date fixed for redemption, at a redemption price equal to 100% of the Current Principal Amount of the Securities on the date fixed for redemption (together with accrued and unpaid interest through but excluding the date fixed for redemption and Additional Amounts, if any), if the Company determines after consultation with the FSA that there is more than an insubstantial risk that the Securities may not be partially or fully included in the Company’s Additional Tier 1 Capital under the applicable standards set forth in the Applicable Capital Adequacy Regulations.
Prior to making any notice of redemption of the Securities pursuant to this Section, the Company will deliver to the Trustee a certificate signed by a Responsible Officer of the Company stating that the conditions precedent to such redemption have been fulfilled. The Trustee shall accept such certificate as sufficient evidence of the satisfaction of the conditions precedent described above, in which event it shall be conclusive and binding on the relevant Securityholders.
Section 11.05 Notice of Redemption. Notice of redemption to the Holders of Securities of any series to be redeemed as a whole or in part at the option of the Company shall be given by mailing notice of such redemption by first-class mail, postage prepaid, at not less than 25 days and not more than 60 days prior to the date fixed for redemption to such Holders of Securities of such series at their last addresses as they shall appear upon the Register. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. Failure to give notice by mail, or any defect in the notice to the Holder of any Security of a series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security of such series.
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The notice of redemption to each such Holder shall specify the principal amount and CUSIP or ISIN number (if any) of each Security of such series held by such Holder to be redeemed, the date fixed for redemption, the redemption price, the place or places of payment, that payment will be made upon presentation and surrender of such Securities, that interest accrued to the date fixed for redemption will be paid as specified in such notice and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. In case any Security of a series is to be redeemed in part only the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Security, a new Security or Securities of such series in principal amount equal to the unredeemed portion thereof will be issued.
The notice of redemption of Securities of any series to be redeemed at the option of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company.
A redemption notice will be automatically rescinded and will have no force and effect, and no redemption amount will be due and payable, if a Capital Ratio Event, Non-Viability Event or Bankruptcy Event or a Liquidation Event occurs prior to the applicable redemption date, in which case the Securities will be subject to a Going Concern Write-Down or a Write-Down and Cancellation as provided in Articles 13 and 14 or the subordination provisions as provided in Article 12, as the case may be. If a redemption notice is rescinded for any of the reasons described in the previous sentence, the Company will endeavor to promptly deliver written notice to the holders of the Securities and the Trustee, specifying the occurrence of the relevant event.
On or before the redemption date specified in the notice of redemption given as provided in this Section (and in any event no later than 10:00 a.m., New York time, on the due date for payment), the Company will deposit with the Trustee in trust or with one or more Paying Agents (or, if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in Section 3.04) an amount of money or other property sufficient to redeem on the redemption date all the Securities of such series so called for redemption at the appropriate redemption price, together with accrued interest to the date fixed for redemption and any Additional Amounts.
Section 11.06 Payment of Securities Called for Redemption. If notice of redemption has been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued through but excluding the date fixed for redemption, and on and after said date (unless the Company fails in the payment of such Securities at the redemption price, together with interest accrued to said date) interest on the Securities or portions of Securities so called for redemption shall cease to accrue and, except as provided in Section 5.05 and Section 9.03, such Securities shall cease from and after the date fixed for redemption to be entitled to any benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and unpaid interest to the date fixed for redemption. On presentation and surrender of such Securities at a place of payment specified in said notice, said Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption; provided that any payment of interest becoming due on the date fixed for redemption shall be payable to the Holders of such Securities registered as such on the relevant record date subject to the terms and provisions of Sections 2.03 and 2.04.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest borne by such Security.
Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Company, a new Security
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or Securities of such series, of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented.
Section 11.07 Exclusion of Certain Securities from Eligibility for Selection for Redemption. Securities shall be excluded from eligibility for selection for redemption if they are identified by registration and certificate number in a written statement signed by a Responsible Officer of the Company and delivered to the Trustee at least 40 days prior to the last date on which notice of redemption may be given as being owned of record and beneficially by, and not pledged or hypothecated by either (a) the Company or (b) an entity specifically identified in such written statement as directly or indirectly controlling or controlled by or under direct or indirect common control with the Company.
Section 11.08 Repurchase of Securities. The Company or any subsidiary of the Company may, at any time, subject to prior confirmation of the FSA (if such confirmation is required under the Applicable Capital Adequacy Regulations), purchase any or all of the Securities in the open market or otherwise at any price in accordance with any applicable law or regulation. Subject to applicable law, neither the Company nor any subsidiary of the Company shall have any obligation to purchase or offer to purchase any Securities held by any Holder as a result of its purchase or offer to purchase Securities held by any other Holder in the open market or otherwise. Any such Securities purchased by the Company or any subsidiary of the Company may, at the discretion of the Company or the relevant subsidiary, as the case may be, be held or resold or surrendered to the Trustee for cancellation by the Company or any such subsidiary, as the case may be. The Securities so purchased, while held by or on behalf of the Company or any such subsidiary, as the case may be, shall not entitle the holder to vote at any meetings of the holders of the relevant series of Securities and shall not be deemed to be Outstanding for the purposes of calculating quorums at meetings of the Holders of such series of Securities or for the purposes of Article 4. The provisions of this Section are subject to Section 2.03.
ARTICLE 12
SUBORDINATION OF SECURITIES
Section 12.01 Agreement to Subordinate. The Company covenants and agrees, and each Holder, by subscribing, purchasing or otherwise acquiring any Security issued hereunder likewise covenants and agrees, that all Securities shall be issued subject to the provisions of this Article and that the principal of and interest on all Securities issued hereunder shall, to the extent and in the manner set forth herein, subject to any modifications or additional terms set forth in any applicable supplemental indenture, be subordinated and subject in right to the prior payment in full of all Senior Indebtedness.
Section 12.02 Subordination of the Securities. Securities issued pursuant to this Indenture shall constitute direct and unsecured obligations of the Company that are conditional and subordinated, as provided under this Article, and shall at all times rank pari passu and without any preference among themselves. As provided under this Article, upon the occurrence of a Liquidation Event, the Securities (i) will be subordinated to all of the existing and future Senior Indebtedness (which includes dated subordinated debt of the Company), (ii) will rank pari passu with all of the existing and future Liquidation Parity Liabilities and (iii) will rank senior to all of the existing and future Liquidation Junior Liabilities. Notwithstanding such ranking of the Securities, the Securities issued pursuant to this Subordinated Indenture are subject to a Going Concern Write-Down and a Write-Down and Cancellation under Articles 13 and 14.
The rights of the holders of the Securities will be subordinated in right of payment to all Senior Indebtedness upon the occurrence of a Liquidation Event. If a Liquidation Event has occurred, and so long as any such Liquidation Event shall continue, each holder of the Securities will only have a Liquidation Claim. For so long as such Liquidation Event continues, no payments in respect of a Liquidation Claim shall be made unless and until a Condition for Liquidation Payment shall have been met. Payments made in respect of a Liquidation Claim shall not exceed the applicable Liquidation Distributable Amount. At any time prior to the payment of a Liquidation Claim in accordance with the subordination provisions herein, a Liquidation Claim shall be subject
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to a Going Concern Write-Down or a Write-Down and Cancellation upon the occurrence of a Capital Ratio Event, Non-Viability Event or Bankruptcy Event, as the case may be.
“Liquidation Claim” means the claim of each holder of the Securities then outstanding in a liquidation proceeding (seisan) (excluding a special liquidation proceeding (tokubetsu seisan)) with respect to the Company, in an amount equal to the Current Principal Amount of the Securities held by such holder on the date on which such claim becomes and due and payable pursuant to the subordination provisions herein, plus any accrued and unpaid interest thereon to, but excluding, the date on which the Liquidation Event occurs (unless cancelled in accordance with the terms set forth in Section 3.10 or Section 3.11 and any Additional Amounts, if any, excluding any amounts that shall have become due and payable on or before the date of the occurrence of a Liquidation Event and remain unpaid).
“Condition for Liquidation Payment” means, upon the occurrence and continuation of a Liquidation Event, all Senior Indebtedness held by creditors of the Company entitled to payment or satisfaction prior to commencement of distribution of residual assets to shareholders of the Company is paid in full or otherwise satisfied in full in the liquidation proceeding (seisan) pursuant to the Companies Act.
“Liquidation Distributable Amount” means the amount of liquidation distributions that would have been paid from the assets of the Company in respect of a Liquidation Claim, assuming that (i) all Liquidation Claims and all Liquidation Parity Liabilities had been the Senior Liquidation Preferred Shares and (ii) all Liquidation Junior Liabilities had been preferred shares of the Company other than the Senior Liquidation Preferred Shares.
For the purposes of the calculation of the Liquidation Distributable Amount, the amount of Liquidation Claims and the amount of principal amount, accrued and unpaid interest and additional amounts in respect of any Liquidation Parity Liabilities and Liquidation Junior Liabilities that are not denominated in Japanese yen shall be calculated in Japanese yen, and the Liquidation Distributable Amount payable in respect of a Liquidation Claim upon the satisfaction of the Condition for Liquidation Payment (if any) shall be initially calculated in Japanese yen and converted into U.S. dollars, each in a manner that the Company deems appropriate pursuant to applicable Japanese law.
The relative rankings and payment of the Liquidation Claims and other claims against the Company in any liquidation proceeding (seisan) in respect of the Company are in all events subject to the provisions of the Companies Act, which prohibit distribution of residual assets to shareholders prior to payment or satisfaction of all of the then outstanding debts of the Company, including the Liquidation Claims to the extent not written down or cancelled pursuant to the going concern, non-viability and bankruptcy write-down provisions and the interest cancellation provisions, and subject to the subordination provisions, each described herein, including the provisions of Section 3.10, Section 3.11 and Articles 12, 13 and 14.
Notwithstanding the Securities being stated to rank ahead of certain preferred shares and common shares of the Company as described above, the Securities are subject to a Going Concern Write-Down and a Write-Down and Cancellation, as provided in Articles 13 and 14.
Section 12.03 Reimbursement of Excess Payment and Limited Right of Set-off. Each Holder of any Securities, by subscribing for, purchasing or otherwise acquiring such Securities shall thereby agree that (i) if any payment of principal or interest in respect of the Securities is made to such Holder after the occurrence of a Liquidation Event and the amount of such payment exceeds the amount, if any, that should have been paid to such Holder upon the proper application of the subordination provisions of such series of Securities, the payment of such excess amount shall be deemed null and void and such Holder or the Trustee or Paying Agent (to the extent it has not paid such amount to any Holder) (as the case may be) shall be obliged to return the amount of the excess payment within ten days after receiving notice of the excess payment, and (ii) upon the occurrence of a Liquidation Event and for so long as such Liquidation Event shall continue, any liabilities of the Company to such Holder which would otherwise become so payable on or after the date on which such Liquidation Event
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occurs shall not be set off against any liabilities of such Holder owed to the Company unless, until and only in such amount as the liabilities of the Company under the Securities become payable pursuant to the proper application of the subordination provisions under this Article.
Section 12.04 No Amendment. No amendment or modification which is prejudicial to any present or future creditor in respect of any Senior Indebtedness of the Company shall be made to the provisions of Section 12.01, Section 12.02 or Section 12.03 in any respect. In no event shall any such amendment or modification be effective against any such creditor.
Section 12.05 Provisions Solely to Define Relative Rights. The provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Indebtedness on the other hand. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay or cause to be paid to the Holders of the Securities the principal of and interest on the Securities as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than the holders of Senior Indebtedness; or (c) prevent the Trustee or a Holder of any Security from exercising all remedies otherwise permitted by applicable law upon breach under this Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder. For the avoidance of doubt, upon the occurrence of a Liquidation Event as set forth in this Article 12, the Trustee in its capacity as such under this Indenture undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Indenture, and no implied covenants or obligations with respect to the holders of the Senior Indebtedness shall be deemed to apply to the Trustee in its capacity as such under this Indenture based on the terms hereof.
Section 12.06 Trustee to Effectuate Subordination. Each Holder of any Securities, by subscribing for, purchasing or otherwise acquiring such Securities, authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article and appoints the Trustee his attorney-in-fact for any and all such purposes.
Section 12.07 No Waiver of Subordination Provisions. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any non-compliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with.
Section 12.08 Notice to Trustee. (a) The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment when due to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article or any other provision of this Indenture, the Trustee and any Paying Agent may continue to make payments on the Securities and the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution to or by the Trustee or any Paying Agent in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received at the Corporate Trust Office of the Trustee from the Company or a holder of Senior Indebtedness or from any trustee therefor at least five (5) Business Days prior to the date of such payment, written notice of facts that would cause the payment of any obligations with respect to the Securities to violate this Article, and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Section 5.01, shall be entitled in all respects to assume that no such facts exist. Notwithstanding the provisions of this Article 12 or any other provisions of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would permit the resumption of payments on or distributions in respect of the Securities or the acquisition of the Securities by the Company unless the Trustee shall have received an Officers’ Certificate or a written notice from a Representative (as such term is defined below) or from any holder of Senior
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Indebtedness for which there is no Representative, to the effect that such resumption is permitted and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Section 5.01, shall be entitled in all respects to assume that no such facts exist. Only the Company, a Representative or of any holder of Senior Indebtedness for which there is no Representative, may give any such notice provided for under this Section 12.08, such notice from the Company to be in the form of an Officers’ Certificate. Nothing in this Article 12 shall impair the claims of, or payments to, the Trustee under or pursuant to Section 4.03 and Section 5.06 hereof.
(b) Upon any payment or distribution of assets of the Company referred to in this Article 12, the Trustee and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of the indenture trustee or other trustee, agent or representative for the Senior Indebtedness (each, for purposes of this Section 12.08, a “Representative”), or of any holder of Senior Indebtedness for which there is no Representative, or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 12. In the event that the Trustee determines, in good faith, that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article 12, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article 12 and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
Section 12.09 Trustee not Fiduciary for Holders of Senior Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders or creditors if it shall in good faith pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article or otherwise.
Section 12.10 Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee’s Rights. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder.
Section 12.11 Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “Trustee” as used in this Article shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that Section 12.10 shall not apply to the Company or any of its affiliates if the Company or such affiliate acts as a Paying Agent.
Section 12.12 Moneys Subordinated. Upon the occurrence of a Liquidation Event, payments from money held under Section 5.05 by the Trustee or any Paying Agent for the payment (subject to the claims of, or payments to, the Trustee or any Agent under or pursuant to this Indenture) of principal of and interest on the Securities (and Additional Amounts, if any) shall be subordinated to the prior payment of any Senior Indebtedness or subject to the restrictions set forth in this Article and the Holders shall be obligated to pay over any such amount to the Company or any holder of Senior Indebtedness or any other creditor of the Company, as applicable.
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ARTICLE 13
WRITE-DOWN AND CANCELLATION
Section 13.01 Agreement to Write-Down and Cancellation. Each Holder of any Securities, by subscribing for, purchasing or otherwise acquiring such Securities, accepts and agrees that, notwithstanding anything to the contrary contained in the terms of the Securities:
(a) upon the occurrence of a Non-Viability Event or a Bankruptcy Event and a Write-Down and Cancellation of the Securities, such holders shall be deemed to have irrevocably waived their right to claim or receive, not having any rights against the Company with respect to, and to be unable to instruct the Trustee to enforce, the payment of principal of or interest on the Securities (including Additional Amounts with respect thereto, if any) (except for any payments of principal, interest or other amounts that have become due and payable on or before the date of the occurrence of such Non-Viability Event or Bankruptcy Event and remain unpaid) and shall be bound by the provisions of this Article;
(b) upon the occurrence of a Non-Viability Event, a Bankruptcy Event or a Liquidation Event after the issuance of a redemption notice, (1) such redemption notice shall be automatically rescinded, (2) no redemption amount shall become due and payable, (3) in case of the occurrence of a Non-Viability Event or a Bankruptcy Event, the Securities shall become subject to a Write-Down and Cancellation, and (4) in case of the occurrence of a Liquidation Event, the Securities shall become subject to the subordination provisions of Article 12;
(c) no such Write-Down and Cancellation or rescission in accordance with the terms of this Indenture shall constitute a default or breach in payment or otherwise under the terms of the Securities; and
(d) such holder shall authorize, direct and request DTC (or any other applicable clearing organization) and any direct participant in DTC or other intermediary through which it holds the Securities, the Trustee and the Registrar to take any and all necessary action, if required, to implement a Write-Down and Cancellation of the Securities without any further action or direction on the part of such Holder.
“Bankruptcy Event” means any of the following events:
(a) a competent court in Japan shall have commenced bankruptcy proceedings with respect to the Company pursuant to the provisions of the Bankruptcy Act;
(b) a competent court in Japan shall have commenced corporate reorganization proceedings with respect to the Company pursuant to the provisions of the Corporate Reorganization Act;
(c) a competent court in Japan shall have commenced civil rehabilitation proceedings with respect to the Company pursuant to the provisions of the Civil Rehabilitation Act;
(d) a special liquidation proceeding (tokubetsu seisan) shall have commenced by or with respect to the Company under the Companies Act; or
(e) the Company shall have become subject to bankruptcy, corporation reorganization, civil rehabilitation, special liquidation or other equivalent proceeding pursuant to any applicable law of any jurisdiction other than Japan.
A “Non-Viability Event” will be deemed to have occurred at the time that the Prime Minister of Japan confirms (nintei) that any measures (tokutei dai nigō sochi) set forth in Article 126-2, Paragraph 1, Item 2 of the Deposit Insurance Act (or any successor provision thereto) need to be applied to the Company.
“Write-Down and Cancellation Date” means, upon the occurrence of a Non-Viability Event, the date that shall be determined by the Company after consultation with the FSA or any other relevant Japanese supervisory authority and shall be no later than ten Business Days following the date of the Write-Down and Cancellation Notice.
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Section 13.02 Suspension and Write-Down and Cancellation. Notwithstanding anything to the contrary contained in the terms of the Securities or this Indenture, upon the occurrence of a Non-Viability Event until the Write-Down and Cancellation Date, no principal of, interest on, or other amount under, the Securities (including Additional Amounts with respect thereto, if any) (other than with respect to principal, interest and any Additional Amounts that have become due and payable on or before the date of the occurrence of the Non-Viability Event and remain unpaid) shall thereafter become due, and the Company’s obligations with respect to the payment of any such amounts and any claims therefor (other than with respect to principal, interest and any Additional Amounts that have become due and payable on or before the date of the occurrence of the Non-Viability Event and remain unpaid) will be suspended from the occurrence of the Non-Viability Event until the Write-Down and Cancellation Date.
On the Write-Down and Cancellation Date:
(a) the principal of, or interest on, or any other amount under, the Securities (including Additional Amounts with respect thereto, if any) will be permanently written down to zero, the Company shall be discharged and released from any and all of its obligations to pay the principal of, interest on and any other amount under the Securities (including Additional Amounts with respect thereto, if any), and the Securities will be cancelled, in each case other than principal amount, interest and any Additional Amounts that have become due and payable on or before the date of the occurrence of the Non-Viability Event and remain unpaid;
(b) the Company’s obligations shall remain with respect to (A) any accrued and unpaid interest on or principal of the Securities and (B) any Additional Amounts, in each case, if and only to the extent that such interest, principal or Additional Amounts, as applicable, has become due and payable to the Holders of such Securities on or before the date of the occurrence of the Non-Viability Event and remain unpaid; and
(c) the Holders of the Securities will be deemed to have irrevocably waived their right to claim or receive, and will not have any rights against the Company, the Trustee or any agent with respect to, and will be unable to instruct the Trustee to enforce, payment of principal of, or interest on, or any other amount under, the Securities (including Additional Amounts with respect thereto, if any), except as described in paragraph (b) above.
Notwithstanding anything to the contrary contained in the terms of the Securities or this Indenture, upon the occurrence of a Bankruptcy Event, no principal of, interest on, or other amount under, the Securities (including Additional Amounts with respect thereto, if any) (other than with respect to principal, interest and any Additional Amounts that have become due and payable on or before the date of the occurrence of the Bankruptcy Event and remain unpaid) shall thereafter become due, and immediately upon such occurrence:
(a) the principal of, or interest on or any other amount under the Securities (including Additional Amounts with respect thereto, if any) will be permanently written down to zero, the Company shall be discharged and released from any and all of its obligations to pay the principal of, interest on and any other amount under the Securities (including Additional Amounts with respect thereto, if any), and the Securities will be cancelled, in each case other than principal amount, interest and any Additional Amounts that have become due and payable on or before the date of the occurrence of the Bankruptcy Event and remain unpaid;
(b) the Company’s obligations shall remain with respect to (A) any accrued and unpaid interest on or principal of the Securities and (B) any Additional Amount, in each case, if and only to the extent that such interest, principal or Additional Amounts, as applicable, has become due and payable to the Holders of such Securities on or before the date of the occurrence of the Bankruptcy Event and remain unpaid; and
(c) the Holders of the Securities will be deemed to have irrevocably waived their right to claim or receive, and will not have any rights against the Company, the Trustee or any agent with respect to, and will be unable to instruct the Trustee to enforce, payment of principal of or interest on or any other amount under the Securities (including Additional Amounts with respect thereto, if any), except as described in paragraph (b) above.
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The events described in paragraphs (a) through (c) in the above two paragraphs are referred to as a “Write-Down and Cancellation.”
Section 13.03 Suspension of Settlement through DTC. The Company and each Holder of a Security acknowledge and agree that, following the receipt of a Write-Down and Cancellation Notice by DTC and the commencement of the Suspension Period, DTC will suspend all clearance and settlement of the Securities through DTC for the duration of the Suspension Period. Notwithstanding any delay in, or unavailability of procedures of, DTC reflecting a Write-Down and Cancellation on its systems, a Write-Down and Cancellation shall take place on the relevant Write-Down and Cancellation Date or upon the occurrence of the Bankruptcy Event, as applicable.
Section 13.04 Reimbursement of Payment and No Right of Set-off. Each Holder of any Securities, by subscribing for, purchasing or otherwise acquiring such Securities, shall thereby agree that if any payment is made to its Securities with respect to a payment obligation that did not become due and payable on or before the date of the occurrence of a Non-Viability Event or Bankruptcy Event, as the case may be, then the payment of such amount shall be deemed null and void and such Holder or the Trustee or Paying Agent (to the extent it has not paid such amount to any Holder) (as the case may be) shall be obliged to return the amount of such payment within ten days after receiving notice of such null and void payment and shall also thereby agree that any liabilities of the Company to such Holder in respect of the Securities which were subject to a Write-Down and Cancellation as provided in Article 13 shall not be set off against any liabilities of such Holder owed to the Company.
Section 13.05 Limitation of Rights upon a Non-Viability Event or Bankruptcy Event. Notwithstanding anything to the contrary set forth in this Indenture or a Security, upon the occurrence of a Non-Viability Event or Bankruptcy Event, (a) the Holders of the Securities shall have no rights whatsoever under this Indenture or the Securities to take any action or enforce any rights or to instruct the Trustee to take any action or enforce any rights whatsoever, (b) except for any indemnity or security provided by any Holder in such instruction or related to such instruction, any instruction previously given to the Trustee by any Holder shall cease automatically and shall be deemed null and void and of no further effect, (c) no Holder may exercise, claim or plead any right of set-off, compensation or retention in respect of any amount owed to it by the Company arising under, or in connection with, the Securities and each Holder of a Security shall, by virtue of its holding of such Security, be deemed to have irrevocably waived all such rights of set-off, compensation or retention and (d) no Holder will be entitled to make any claim in any bankruptcy, insolvency, civil rehabilitation, corporate reorganization or liquidation proceedings involving the Company or have any ability to initiate or participate in any such proceedings or do so through a representative; provided that nothing in this Section will limit a Holder’s rights with respect to payments of principal of or interest on a Security (including Additional Amounts with respect thereto, if any) that have become due and payable on or before the date of the occurrence of the Non-Viability Event or Bankruptcy Event, as the case may be, and remain unpaid.
Section 13.06 Notice of Write-Down and Cancellation.
(a) The Company shall endeavor, as soon as practicable after the occurrence of a Non-Viability Event or a Bankruptcy Event, to deliver a written notice (a “Write-Down and Cancellation Notice”) to Holders and to the Trustee and the Agents substantially in the form attached hereto as Exhibit C confirming, among other things, the occurrence of such Non-Viability Event or Bankruptcy Event and the Write-Down and Cancellation Date or the date of occurrence of the Bankruptcy Event, as applicable.
(b) Any failure or delay by the Company to provide a Write-Down and Cancellation Notice upon the occurrence of a Non-Viability Event or Bankruptcy Event shall not change or delay the effect of the occurrence of such Non-Viability Event or Bankruptcy Event on the Write-Down and Cancellation taking place on the Write-Down and Cancellation Date or upon the occurrence of the Bankruptcy Event, as applicable, under the Securities, nor give Holders of the Securities any rights as a result of such failure or delay.
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Section 13.07 Additional Provisions Relating to a Write-Down and Cancellation.
(a) In connection with any Write-Down and Cancellation, subject to Section 13.08 hereof, the Trustee, Registrar and Paying Agent, as applicable, shall act in a manner consistent with the procedures and terms set forth in this Indenture relating thereto, including ceasing to register any attempted transfer of any Securities and reflecting the Write-Down and Cancellation on the Register as of the Write-Down and Cancellation Date. By its acquisition of the Securities, each Holder shall be deemed to have authorized, directed and requested the Trustee, Registrar, Paying Agent and any other intermediary through which it holds such Securities to take any and all necessary action, if required, to effectuate the Write-Down and Cancellation as of the Write-Down and Cancellation Date in accordance with the terms of this Indenture. All authority conferred or agreed to be conferred by each Holder pursuant to this Section, including the consents given by such Holder, shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of such Holder.
(b) Upon the occurrence of a Non-Viability Event or Bankruptcy Event and delivery of the related Write-Down and Cancellation Notice by the Company to the Trustee, any and all moneys deposited with the Trustee (and held by it or any Paying Agent) for the payment of any amounts under the Securities that have not become due and payable prior to the date of such Non-Viability Event or Bankruptcy Event shall be returned promptly to the Company. For the avoidance of doubt, a Non-Viability Event or Bankruptcy Event and the resulting Write-Down and Cancellation shall not constitute a default or breach under this Indenture.
Section 13.08 Responsibilities of Trustee. Notwithstanding anything to the contrary that may be set out in this Indenture any other document relating to the Securities:
(a) as long as such Securities are held in global form, neither the Trustee nor any Agent, shall, in any circumstances, be responsible or liable to the Company, the Holders or any other person for any act, omission or default by DTC with respect to the implementation of any Write-Down and Cancellation by any of them in respect of such Securities; and
(b) except as otherwise required under Section 4.11, the Trustee shall not be under any duty to determine, monitor or report whether a Non-Viability Event or a Bankruptcy Event has occurred or circumstances exist which may lead to the occurrence of a Non-Viability Event or a Bankruptcy Event and will not be responsible or liable to the Holders or any other person for any loss arising from any failure by it to do so. Unless and until the Trustee receives the Write-Down and Cancellation Notice and is expressly notified in writing, it shall be entitled to assume that no such event or circumstance has occurred or exists;
(c) each Holder shall be deemed to have authorized, directed and requested the Trustee and the Agents, as the case may be, to take any and all necessary action to give effect to any Write-Down and Cancellation following the occurrence of any Non-Viability Event or Bankruptcy Event without any further action or direction on the part of the Holders; and
(d) the Trustee shall not be under any duty to determine, calculate or verify any amount payable to holders under this Indenture (including any write-down amounts) and with regards to the Securities and the Trustee will not be responsible to the Holders or any other person for any loss or liability arising from any failure by it to do so.
ARTICLE 14
GOING CONCERN WRITE-DOWNS AND WRITE-UPS
Section 14.01 Agreement to Going Concern Write-Down. Each Holder of any Securities, by subscribing for, purchasing or otherwise acquiring such Securities, accepts and agrees that, to the extent and in the manner set forth herein:
(a) upon the occurrence of a Capital Ratio Event and a Going Concern Write-Down of the Securities, such Holders shall be deemed to have irrevocably waived their right to claim or receive, and not to have any
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rights against the Company with respect to, and to be unable to instruct the Trustee to enforce, the payment of Current Principal Amount of the Securities to the extent of the relevant Going Concern Write-Down Amount or interest thereon (including Additional Amounts with respect thereto, if any) and shall be bound by the provisions of this Article;
(b) upon the occurrence of a Capital Ratio Event after the issuance of a redemption notice, (1) such redemption notice shall be automatically rescinded, (2) no redemption amount shall become due and payable, and (3) the Securities shall become subject to a Going Concern Write-Down;
(c) no such Going Concern Write-Down, or rescission in accordance with the terms of this Indenture shall constitute a default or breach in payment or otherwise under the terms of the Securities; and
(d) such Holder shall authorize, direct and request DTC (or any other applicable clearing organization) and any direct participant in DTC or other intermediary through which it holds the Securities, the Trustee and the Registrar to take any and all necessary action, if required, to implement a Going Concern Write-Down of the Securities without any further action or direction on the part of such Holder.
A “Capital Ratio Event” will be deemed to have occurred when the Company’s Consolidated Common Equity Tier 1 Capital Ratio, that the Company has reported or publicly announced, as applicable, in any of: (i) an annual consolidated financial condition report (renketsu kessan jokyo hyo) submitted by the Company to the FSA or any other relevant Japanese supervisory authority (including such report under the FIEA), (ii) an annual business report (jigyo hokokusho) submitted by the Company to the FSA or any other relevant Japanese supervisory authority (including such report under the FIEA), (iii) a report which describes the soundness of the Company’s management submitted by the Company to the FSA or any other relevant Japanese supervisory authority (including such report under the FIEA) (iv) a public announcement made by the Company in accordance with applicable Japanese law (including such announcement under the FIEA) or the rules of a relevant Japanese securities exchange, or (v) a report made by the Company to the FSA or any other relevant Japanese supervisory authority after consultation with the outside auditor of the Company following the results of an inspection of the FSA or any other relevant Japanese supervisory authority (including such report under the FIEA), has fallen below 5.125%; provided, however, that a Capital Ratio Event shall be deemed to have not occurred if prior to such report or public announcement, (a) the Company submits a plan to the FSA or any other competent regulatory authority, under which plan its Consolidated Common Equity Tier 1 Capital Ratio is expected to increase above 5.125% in the absence of a Going Concern Write-Down of the Securities, and (b) the FSA or any other competent regulatory authority approves such plan.
In such case, the Company will endeavor, as soon as practicable after the Company reports or publicly announces, as applicable, its Consolidated Common Equity Tier 1 Capital Ratio, to deliver a written notice to the holders of the Securities, the Trustee and the paying agent in accordance with the terms of this Indenture, confirming that a Capital Ratio Event shall be deemed to have not occurred. Any failure or delay by the Company to deliver such notice shall not change or delay the effect of the non-occurrence of the Capital Ratio Event on its payment obligations under the Securities, or give holders of the Securities any rights as a result of such failure or delay.
“Going Concern Write-Down Date” means the date that shall be determined by the Company after consultation with the FSA or any other relevant Japanese supervisory authority and shall be no later than twenty Business Days following the date of the relevant Going Concern Write-Down Notice.
“Going Concern Write-Down Amount” means, on any Going Concern Write-Down Date, the amount by which the Current Principal Amount outstanding of the relevant series of Securities per $1,000 in Original Principal Amount is to be reduced on such date, such amount being:
(a) the product of the Total Going Concern Write-Down Amount and a ratio, the numerator of which is the Current Principal Amount outstanding of the relevant series of Securities per $1,000 in Original Principal Amount, and the denominator of which is the aggregate amount of the Current Principal Amount
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outstanding of all of the relevant series of Securities and the Current Principal Amount outstanding of any Going Concern Write-Down Instruments (other than any Going Concern Full Write-Down Instrument) (rounding any amount less than a whole cent up to the nearest whole cent); or
(b) if the amount set forth in (i) is equal to or greater than the Current Principal Amount of the relevant series of Securities per $1,000 in Original Principal Amount, then the amount necessary to reduce the Current Principal Amount of the relevant series of Securities to one cent per $1,000 in Original Principal Amount.
“Total Going Concern Write-Down Amount” means the amount determined by the Company after consultation with the FSA or any other relevant Japanese supervisory authority that would be sufficient in order to restore its Consolidated Common Equity Tier 1 Capital Ratio above 5.125% by the write-down of all or part of the Current Principal Amount outstanding of the relevant series of Securities and the Write-Down or Conversion of the Current Principal Amount outstanding of any Going Concern Write-Down Instrument (other than any Going Concern Full Write-Down Instrument); provided, however, that any amount subject to the Write-Down or Conversion of the Current Principal Amount outstanding of any Going Concern Write-Down Instrument (the “Going Concern Full Write-Down Instrument”) that by its terms provides for the Write-Down or Conversion of such instrument in excess of the amount that would have been subject to the Write-Down or Conversion assuming such instrument contained terms substantially equivalent to the Going Concern Write-Down provisions applicable to the relevant series of Securities as described under this Article shall be deducted from the Total Going Concern Write-Down Amount (and if the Total Going Concern Write-Down Amount becomes less than zero, the Total Going Concern Write-Down Amount shall be zero.).
For the purposes of the calculation of the Going Concern Write-Down Amount, the Current Principal Amount outstanding of the relevant series of Securities and the Current Principal Amount outstanding of any Going Concern Write-Down Instruments that are not denominated in Japanese yen shall initially be calculated in Japanese yen, and the Going Concern Write-Down Amount shall be initially calculated in Japanese yen and converted into U.S. dollars, each in a manner that the Company deems appropriate.
Section 14.02 Suspension and Going Concern Write-Down. Notwithstanding anything to the contrary contained in the terms of the Securities or this Indenture, upon the occurrence of a Capital Ratio Event until the relevant Going Concern Write-Down Date, no Current Principal Amount of or interest on any series of Securities (including Additional Amounts with respect thereto, if any) (other than with respect to the Current Principal Amount, interest and any Additional Amounts that have become due and payable on or before the date of the occurrence of the Capital Ratio Event and remain unpaid) shall thereafter become due to the extent equal to the sum of (A) the relevant Going Concern Write-Down Amount and (B) the amount of interest applicable to such relevant Going Concern Write-Down Amount, and the Company’s obligations with respect to the payment of the Current Principal Amount of, or interest on, such series of Securities (including Additional Amounts with respect thereto, if any) and any claims therefor (other than with respect to the Current Principal Amount, interest and any Additional Amounts that have become due and payable on or before the date of the occurrence of the Capital Ratio Event and remain unpaid) will be suspended to the extent equal to the sum of (A) the relevant Going Concern Write-Down Amount from the occurrence of the Capital Ratio Event until the relevant Going Concern Write-Down Date and (B) the amount of interest applicable to such relevant Going Concern Write-Down Amount.
On a Going Concern Write-Down Date:
(a) the Current Principal Amount of such series of Securities, except for principal that has become due and payable on or before the date of the occurrence of the Capital Ratio Event and remain unpaid, will be written down by an amount equal to the relevant Going Concern Write-Down Amount, the interest on such series of Securities (including Additional Amounts with respect thereto, if any) will be written down by an amount equal to the interest on the relevant Going Concern Write-Down Amount, and the Company shall be discharged and released from any and all of its obligations to pay the Current Principal Amount of such
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series of Securities in an amount equal to the relevant Going Concern Write-Down Amount and the interest on such series of Securities (including Additional Amounts with respect thereto, if any) in an amount equal to the interest on the relevant Going Concern Write-Down Amount (including Additional Amounts with respect thereto, if any);
(b) the Company’s obligations shall remain with respect to (A) any accrued and unpaid interest on or the Current Principal Amount of such series of Securities and (B) any Additional Amounts, in each case, if and only to the extent that such interest, the Current Principal Amount, or Additional Amounts, as applicable, has become due and payable to the holders of such series of Securities on or before the date of the occurrence of the Capital Ratio Event and remain unpaid; and
(c) the holders of such series of Securities will be deemed to have irrevocably waived their right to claim or receive, and will not have any rights against the Company, the Trustee or any agent with respect to, and will be unable to instruct the Trustee to enforce, the payment of the Current Principal Amount of such series of Securities to the extent of the relevant Going Concern Write-Down Amount or interest on the relevant Going Concern Write-Down Amount (including Additional Amounts with respect thereto, if any), except as described in paragraph (b) above.
The events described in paragraphs (a) through (c) are referred to as a “Going Concern Write-Down.”
A Capital Ratio Event may occur on any number of occasions and, accordingly, any series of Securities may be written down on any number of occasions. For the avoidance of doubt, the Current Principal Amount of any series of Securities may never be reduced to below one cent per $1,000 in Original Principal Amount as a result of any Going Concern Write-Down.
Section 14.03 Suspension of Settlement through DTC. The Company and each Holder or beneficial owner of a Security acknowledge that, following the receipt of a Going Concern Write-Down Notice by DTC setting forth that the Current Principal Amount of any series of Securities will be reduced to one cent per $1,000 in Original Principal Amount and the commencement of the Suspension Period, DTC will suspend all clearance and settlement of any series of Securities through DTC for the duration of the Suspension Period. Notwithstanding any delay in, or unavailability of procedures of, DTC reflecting the Going Concern Write-Down on its systems, the Going Concern Write-Down shall take place on the relevant Going Concern Write-Down Date.
Section 14.04 Reimbursement of Payment and No Right of Set-off. Each Holder of any Securities, by subscribing for, purchasing or otherwise acquiring such Securities, shall thereby agree that if any payment is made to its Securities with respect to a payment obligation that was subject to a Going Concern Write-Down as described in this Article, then the payment of such amount shall be deemed null and void, and the Holder or the Trustee or the Paying Agent (to the extent it has not paid such amount to any Holder) (as the case may be) shall be obliged to return the amount of such payment within ten days after receiving notice of such null and void payment, and shall also thereby agree that any liabilities of the Company to such Holder in respect of the Securities which were subject to a Going Concern Write-Down as described in this Article shall not be set off against any liabilities of such Holder owed to the Company.
Section 14.05 Limitation of Rights upon a Capital Ratio Event. Notwithstanding anything to the contrary set forth in this Indenture or a Security, upon the occurrence of a Capital Ratio Event, (a) the Holders of the Securities shall have no rights whatsoever under this Indenture or the Securities to take any action or enforce any rights or to instruct the Trustee to take any action or enforce any rights whatsoever, (b) except for any indemnity or security provided by any Holder in such instruction or related to such instruction, any instruction previously given to the Trustee by any Holder shall cease automatically and shall be deemed null and void and of no further effect, (c) no Holder may exercise, claim or plead any right of set-off, compensation or retention in respect of any amount owed to it by the Company arising under, or in connection with, the Securities and each Holder of a Security shall, by virtue of its holding of such Security, be deemed to have irrevocably waived all such rights of set-off, compensation or retention and (d) no Holder will be entitled to make any claim in any bankruptcy,
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insolvency, civil rehabilitation, corporate reorganization or liquidation proceedings involving the Company or have any ability to initiate or participate in any such proceedings or do so through a representative, in each case, to the extent such right, instruction, exercise, claim or pleading pertains to the Current Principal Amount of the Securities that has been or will be subject to the relevant Going Concern Write-Down as a result of such Capital Ratio Event having occurred, or interest thereon (including Additional Amounts with respect thereto, if any), unless such Current Principal Amount has been reinstated, as described below under Section 14.07; provided that nothing in this Section will limit a Holder’s or beneficial owner’s rights with respect to payments of the Current Principal Amount of or interest on a Security (including Additional Amounts with respect thereto, if any) that have become due and payable on or before the date of the occurrence of the Capital Ratio Event and remain unpaid.
Section 14.06 Notice of Going Concern Write-Down.
(a) The Company will endeavor, as soon as practicable after the occurrence of a Capital Ratio Event, to deliver a written notice (a “Going Concern Write-Down Notice”) to Holders and to the Trustee and the Agents substantially in the form attached hereto as Exhibit D confirming, among other things, the occurrence of such Capital Ratio Event, the relevant Going Concern Write-Down Date, the relevant Going Concern Write-Down Amount and the Current Principal Amount of the relevant series of Securities on the relevant Going Concern Write-Down Date after giving effect to the relevant Going Concern Write-Down, in respect of all of the relevant series of the Securities.
(b) Any failure or delay by the Company to deliver a Going Concern Write-Down Notice pursuant to this Section shall not change or delay the effect of the occurrence of a Capital Ratio Event on a Going Concern Write-Down taking place on the Going Concern Write-Down Date under the relevant Security, nor give Holders of the Securities any rights as a result of such failure or delay.
Section 14.07 Write-Up Upon a Return to Financial Health. Subject to the Applicable Capital Adequacy Regulations and other applicable laws and regulations, upon occurrence of a Write-Up Event, the Company may elect to cause the Current Principal Amount of any series of outstanding Securities that have been subject to one or more Going Concern Write-Downs to be increased by the relevant Write-Up Amount on a Write-Up Date, by reinstating an amount of principal that was previously subject to a Going Concern Write-Down by the relevant Write-Up Amount on such Write-Up Date. Each such reinstatement is referred to as a “Write-Up.”
A “Write-Up Event” shall be deemed to occur when the Company determines, in its sole discretion and in accordance with the Applicable Capital Adequacy Regulations and other applicable laws and regulations, to reinstate an amount of principal that was previously subject to a Going Concern Write-Down after the Company obtains prior confirmation from the FSA or any other relevant Japanese supervisory authority that its Consolidated Common Equity Tier 1 Capital Ratio will remain at a sufficiently high level after giving effect to the relevant Write-Up of the relevant series of Securities (together with the write-up of any Write-Up Instruments).
“Write-Up Amount” means the product of the total amount determined by the Company after consultation with the FSA or any other relevant Japanese supervisory authority by which the Current Principal Amount outstanding of the relevant series of Securities and the Current Principal Amount outstanding of any Write-Up Instruments is to be increased and a ratio, the numerator of which is $1,000 in the Original Principal Amount of the relevant series of Securities minus the Current Principal Amount outstanding of the relevant series of Securities per $1,000 in Original Principal Amount, and the denominator of which is the aggregate amount of (i) the Original Principal Amount of the Securities minus the Current Principal Amount outstanding of the Securities and (ii) the Original Principal Amount of any Write-Up Instruments minus the Current Principal Amount outstanding of any Write-Up Instruments (rounding any amount less than a whole cent down to the nearest whole cent).
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For the purposes of the calculation of the Write-Up Amount, the Original Principal Amount and the Current Principal Amount outstanding of the relevant series of Securities and the Original Principal Amount and the Current Principal Amount outstanding of any Write-Up Instruments that are not denominated in Japanese yen shall initially be calculated in Japanese yen, and the Write-Up Amount shall be initially calculated in Japanese yen and converted into U.S. dollars, each in a manner that the Company deems appropriate.
“Write-Up Date” means the date that is determined by the Company in its sole discretion after consultation with the FSA or any other relevant Japanese supervisory authority and shall be no later than twenty Business Days following the date of the relevant Write-Up Notice.
Notwithstanding anything to the contrary contained in the terms of the Securities, no Write-Up Event shall occur (i) after any date fixed for the redemption, (ii) after a Liquidation Claim becomes due and payable pursuant to the subordination provisions under Article 12, or (iii) after an occurrence of a Non-Viability Event or a Bankruptcy Event.
Any series of Securities may be subject to one or more Write-Ups, but in no event shall the Current Principal Amount of such series of Securities, after giving effect to any Write-Up, exceed the Original Principal Amount of such series of Securities.
Upon a Write-Up, claims of Holders of any series of Securities with respect to payments of principal of such series of Securities that were previously waived upon the occurrence of a Going Concern Write-Down, and the Company’s obligations to pay the principal of such series of Securities that were previously discharged and released upon the occurrence of a Going Concern Write-Down, shall be reinstated, and such waiver, discharge and release previously given or granted shall be of no further effect, to the extent of the relevant Write-Up Amount, without any retroactive effect, on the relevant Write-Up Date.
Section 14.08 Notice of Write-Up. As soon as practicable after the occurrence of a Write-Up Event, the Company shall endeavor to deliver a written notice (a “Write-Up Notice”) to the holders of the relevant series of Securities, the Trustee and the Paying Agent substantially in the form attached hereto as Exhibit E, confirming, among other things, its determination to effect a Write-Up, the relevant Write-Up Date, the relevant Write-Up Amount and the Current Principal Amount of the relevant series of Securities on the relevant Write-Up Date after giving effect to the relevant Write-Up, in respect of all of the relevant series of the Securities.
Section 14.09 Additional Provisions Relating to Going Concern Write-Downs and Write-Ups. (a) In connection with any Write-Down and Cancellation, subject to Section 14.10 hereof, the Trustee, Registrar and Paying Agent, as applicable, shall act in a manner consistent with the procedures and terms set forth in this Indenture relating thereto, including reflecting any Going Concern Write-Down or Write-Up on the Register as of the relevant Going Concern Write-Down Date or the relevant Write-Up Date. By its acquisition of the Securities, each Holder shall be deemed to have authorized, directed and requested the Trustee, Registrar, Paying Agent and any other intermediary through which it holds such Securities to take any and all necessary action, if required, to effectuate the any Going Concern Write-Down or Write-Up on the relevant Going Concern Write-Down Date or the relevant Write-Up Date in accordance with the terms of this Indenture. All authority conferred or agreed to be conferred by each Holder pursuant to this Section, including the consents given by such Holder, shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of such Holder.
(b) Upon the occurrence of a Capital Ratio Event and delivery of the related Going Concern Write-Down Notice by the Company to the Trustee, any and all moneys deposited with the Trustee (and held by it or any Paying Agent) for the payment of any amounts under the Securities that have not become due and payable prior to the date of such Capital Ratio Event shall be returned promptly to the Company. For the voidance of doubt, a Capital Ratio Event and the resulting Going Concern Write-Down shall not constitute a default or breach under this Indenture.
63
Section 14.10 Responsibilities of Trustee. Notwithstanding anything to the contrary that may be set out in this Indenture any other document relating to the Securities:
(a) as long as such Securities are held in global form, neither the Trustee nor any Agent, shall, in any circumstances, be responsible or liable to the Company, the Holders or any other person for any act, omission or default by DTC with respect to the implementation of any Going Concern Write-Down by any of them in respect of such Securities; and
(b) except as otherwise required under Section 4.11, the Trustee shall not be under any duty to determine, monitor or report whether a Capital Ratio Event has occurred or circumstances exist which may lead to the occurrence of a Capital Ratio Event and will not be responsible or liable to the Holders or any other person for any loss arising from any failure by it to do so. Unless and until the Trustee receives the Going Concern Write-Down Notice and is expressly notified in writing, it shall be entitled to assume that no such event or circumstance has occurred or exists;
(c) each Holder shall be deemed to have authorized, directed and requested the Trustee and the Agents, as the case may be, to take any and all necessary action to give effect to any Going Concern Write-Down following the occurrence of any Capital Ratio Event without any further action or direction on the part of the Holders; and
(d) the Trustee shall not be under any duty to determine, calculate or verify any amount payable to holders under this Indenture (including any write-down amounts) and with regards to the Securities and the Trustee will not be responsible to the Holders or any other person for any loss or liability arising from any failure by it to do so.
[Signature pages follow]
64
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first written above.
| NOMURA HOLDINGS, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signatures continue on next page]
[Signature page to Perpetual Subordinated Indenture]
| CITIBANK, N.A. as Trustee | ||
| By: | ||
| Name: | ||
| Title: | ||
[End of Signatures]
[Signature page to Perpetual Subordinated Indenture]
FORM OF OFFICER’S CERTIFICATE OF NOMURA HOLDINGS, INC.
PURSUANT TO SECTION 3.06
Date: [ ]
Pursuant to Section 3.06 of the Indenture dated as of [ ] (the “Indenture”), between Nomura Holdings, Inc. (the “Company”) and Citibank, N.A., as trustee, relating to the issuance of $[ ] aggregate principal amount of [[ ]%] fixed rate resetting perpetual subordinated debt securities (the “Securities”), the undersigned does hereby certify, in [his/her] capacity as a Responsible Officer of the Company (as defined in the Indenture), that:
As of the date hereof, the Company [is in compliance with all conditions and covenants on its part under the Indenture.][is not in compliance with all conditions and covenants under the Indenture, details of each such default and the nature and status thereof specified below: [ ]]
[Signature page follows]
A-1
IN WITNESS WHEREOF, the undersigned has executed this compliance certificate as of the date set forth above.
| By: | ||
| Name: | ||
| Title: | ||
| By: | ||
| Name: | ||
| Title: | ||
A-2
FORM OF CANCELLATION OF INTEREST PAYMENT NOTICE
PURSUANT TO SECTION 3.17
NOTICE TO DTC, TRUSTEE AND AGENTS AND FOR PUBLICATION
AS A NOTICE TO HOLDERS AND BENEFICIAL OWNERS OF THE NOTES
[Company Letterhead]
To: The Depository Trust Company
55 Water Street, 25th Floor
New York, NY 10041-0099
Attn: Mandatory Reorganization Department
Fax: +1-212-855-5488
Email: mandatoryreorgannouncements@dtcc.com [* In the case of certificated securities, this notice shall be sent directly to Holders and references to DTC herein shall be amended accordingly.]
Citibank, N.A.
(as Trustee)
388 Greenwich Street
New York, NY 10013
United States of America
Citibank, N.A., London Branch, Corporate Trust Department
(as Paying Agent, Transfer Agent, Registrar and Authenticating Agent)
Citigroup Centre
Canada Square, Canary Wharf
London E14 5LB
United Kingdom
Re: Nomura Holdings, Inc.’s [U.S.$/another currency][·]1 [ [·]%] [Fixed Rate Resetting] [Perpetual Subordinated Notes] (CUSIP: [·]; ISIN: [·]) – Notice to DTC, the Trustee, the Agents and Holders and Beneficial Owners of the Notes of [Optional]/[Mandatory] Cancellation of Interest Payment
This notice is in relation to Nomura Holdings, Inc.’s [U.S.$/another currency] [·] [[·]%] [fixed rate resetting] [perpetual subordinated notes] (CUSIP: [·]; ISIN: [·]) issued on [·], 20[·] (the “Notes”) pursuant to the perpetual subordinated indenture, dated [ ] (the “Indenture”) between Nomura Holdings, Inc. (the “Company”) and Citibank, N.A., as trustee (the “Trustee”), and offered and sold pursuant to the prospectus supplement dated [·], 20[·] and the accompanying prospectus dated [·], 20[·]. Capitalized terms used herein and not defined herein shall have the respective meanings ascribed to such terms in the Indenture.
[in the case of an optional cancellation of interest pursuant to [Section 3.10] of the Indenture:]
The Company hereby notifies The Depository Trust Company (“DTC”), the Trustee, the Agents and the Holders and beneficial owners of the Notes that it has determined, in its sole discretion to cancel [all of/a part of] the payment of interest scheduled to be made on the Notes on [·], 20[·] (the “Interest Payment Date”) pursuant to Section [3.10] of the Indenture.
| 1 Note: | Insert the aggregate principal amount of the Notes outstanding at the time of interest cancellation (reflecting any repurchase or write-down/write-up prior thereto). |
B-1
Accordingly, [no interest will be payable with respect to the Notes on the Interest Payment Date / the amount of interest scheduled to be paid on the Notes on the Interest Payment Date has been cancelled and is no longer payable in the aggregate amount of $[·] in respect of the Notes, and the aggregate amount of interest on the Notes that is to be paid on the Interest Payment Date is $[·]].
[in the case of a mandatory cancellation of interest pursuant to [Section 3.11] of the Indenture:]
The Company hereby notifies The Depositary Trust Company (“DTC”), the Trustee, the Agents and the Holders and beneficial owners of the Notes that, due to the Interest Payable Amount Limitation, it is prohibited from paying and has cancelled [all of/a part of] the payment of interest scheduled to be made on the Notes on [·], 20[·] (the “Interest Payment Date”) pursuant to [Section 3.11] of the Indenture.
The Interest Payable Amount applicable to the Notes on the Interest Payment Date is [describe the Interest Payable Amount applicable to the Notes on the Interest Payment Date] and, accordingly, the Company is prohibited from paying and has cancelled [all of][part of] the interest on the Notes on the Interest Payment Date in the aggregate amount of $[·] in respect of the Notes, as such amount exceeds the Interest Payable Amount applicable to the Notes on the Interest Payment Date.
[in either case]
Any interest amount (including Additional Amounts with respect thereto, if any), the payment of which is cancelled, will be deemed not to have accrued and will not be due and payable at any time hereafter, and the Company shall be discharged and released from any and all of its obligations to pay such cancelled interest (and Additional Amounts with respect thereto, if any) on the Notes.
If any payment of interest in respect of the Notes all or part of which should have not been paid to a Holder or beneficial owner upon the proper application of the [optional/mandatory] interest payment cancellation provisions of the Indenture is made to such Holder or beneficial owner, such payment shall be deemed null and void, and such Holder or beneficial owner or the Trustee or Paying Agent (to the extent it has not paid such amount to any Holder) shall be obliged to return the amount of the payment to the Company promptly and in any event within ten days of receiving notice of such payment.
The Company hereby instructs DTC, the Trustee and the Paying Agent to take any and all necessary action, if required, to implement such interest payment cancellation of the Notes as set forth above pursuant to DTC’s rules and procedures.
The Company further requests DTC to post this notice on its Reorganization Inquiry for Participants System (or such other system as DTC uses for providing notices to Holders of the Notes) and to transmit this notice to the participants of DTC holding positions in the Notes pursuant to DTC’s rules and procedures.
Should DTC, the Trustee or any Holders or beneficial owners of the Notes have any inquiries, please contact:
[Company Contact Person]
[Telephone]
[Fax]
[Email]
B-2
* The CUSIP number and ISIN appearing in this notice have been assigned to the Notes by organizations not affiliated with the Company and are included solely for the convenience of the Holders of the Notes. The Company will not be responsible for the selection or use of this CUSIP number or ISIN, nor is any representation made as to the correctness or accuracy of the same on the Notes or as indicated in this notice. The cancellation of payment of interest on the Notes will not be affected by any defect in or omission of such numbers.
Dated:
| By: | ||
| Name: | ||
| Title: | ||
B-3
FORM OF WRITE-DOWN AND CANCELLATION NOTICE
PURSUANT TO SECTION 13.06
NOTICE TO DTC, TRUSTEE AND AGENTS AND FOR PUBLICATION
AS A NOTICE TO HOLDERS AND BENEFICIAL OWNERS OF THE NOTES
[Company Letterhead]
To: The Depository Trust Company
55 Water Street, 25th Floor
New York, NY 10041-0099
Attn: Mandatory Reorganization Department
Fax: +1-212-855-5488
Email: mandatoryreorgannouncements@dtcc.com [* In the case of certificated securities, this notice shall be sent directly to Holders and references to DTC herein shall be amended accordingly.]
Citibank, N.A.
(as Trustee)
388 Greenwich Street
New York, NY 10013
United States of America
Citibank, N.A., London Branch, Corporate Trust Department
(as Paying Agent, Transfer Agent, Registrar and Authenticating Agent)
Citigroup Centre
Canada Square, Canary Wharf
London E14 5LB
United Kingdom
Re: Nomura Holdings, Inc.’s [U.S.$/another currency][·]2 [[·]%] [Fixed Rate Resetting] [Perpetual Subordinated Notes] (CUSIP: [·]; ISIN: [·]) – Notice to DTC, the Trustee, the Agents and Holders and Beneficial Owners of the Notes of the Occurrence of a Non-Viability Event or Bankruptcy Event and Write-Down and Cancellation of the Notes
This notice is in relation to Nomura Holdings, Inc.’s [U.S.$/another currency] [·] [[·]%] [fixed rate resetting] [perpetual subordinated notes] (CUSIP: [·]; ISIN: [·]) issued on [·], 20[·] (the “Notes”) pursuant to the perpetual subordinated indenture, dated [ ] (the “Indenture”) between Nomura Holdings, Inc. (the “Company”) and Citibank, N.A., as trustee (the “Trustee”), and offered and sold pursuant to the prospectus supplement dated [·], 20[·] and the accompanying prospectus dated [·], 20[·]. Capitalized terms used herein and not defined herein shall have the respective meanings ascribed to such terms in the Indenture.
The Company hereby notifies The Depository Trust Company (“DTC”), the Trustee, the Agents and the Holders and beneficial owners of the Notes that [a Non-Viability Event has occurred with respect to the Notes and a Write-Down and Cancellation will therefore take place on the Write-Down and Cancellation Date, which has been determined to be [insert the Write-Down and Cancellation Date] / a Bankruptcy Event has occurred with respect to the Notes and a Write-Down and Cancellation has therefore taken place on [insert date (and time, if practicably possible) of Bankruptcy Event]].
| 2 Note: | Insert the aggregate principal amount of the Notes outstanding at the time of write-down and cancellation (reflecting any repurchase or write-down/write-up prior thereto). |
C-1
[On [insert Write-Down and Cancellation Date] (the “Write-Down and Cancellation Date”) / Immediately upon the occurrence of the Bankruptcy Event], (i) the full principal amount of the Notes [will be / was] permanently written down to zero, the Company [shall be / was] discharged and released from any and all of its obligations to pay principal of, interest on and any other amount under the Notes (including Additional Amounts with respect thereto, if any), and the Notes [will be / were] cancelled, (ii) the Company’s obligations shall remain with respect to (A) any accrued and unpaid interest on or principal of the Notes and (B) any Additional Amounts, in the case of each of subclauses (A) and (B) of this paragraph (ii), if and only to the extent that such interest, principal or Additional Amounts, as applicable, has become due and payable to the Holders prior to the [Non-Viability Event][Bankruptcy Event], and remain unpaid, and (iii) the Holders and beneficial owners of the Notes [will be / were] deemed to have irrevocably waived their right to claim or receive, and no longer have any rights against the Company with respect to, and be unable to instruct the Trustee to enforce, repayment of principal of, or interest on or any other amount under the Notes (including Additional Amounts with respect thereto, if any) written down, discharged or released pursuant to paragraph (i) above, and except as described in paragraph (ii) above, all rights of any Holder or beneficial owner for payment of any amounts under or in respect of the Notes [will become / became] null and void, and any Holder or beneficial owner who has received such payment [shall be / became] obliged to return the amount so received immediately to the Company.
The Company hereby instructs DTC to commence the Suspension Period by implementing a “chill” on the clearance and settlement of the Notes within DTC. The Suspension Period shall commence on the New York Banking Day immediately following the date on which this notice is received by DTC, or, if DTC so determines in its discretion in accordance with its rules and procedures, on the second (2nd) New York Banking Day immediately following the date on which this notice is received by DTC, and end [[in case of the occurrence of a Non-Viability Event] on the Write-Down and Cancellation Date/[in case of the occurrence of a Bankruptcy Event] on the date on which DTC reflects the Write-Down and Cancellation on its systems pursuant to its rules and procedures]. The Holders and beneficial owners of the Notes will not be able to settle the transfer of any Notes through DTC upon commencement of the Suspension Period, and any sale or other transfer of the Notes that a Holder or beneficial owner of the Notes may have initiated prior to the commencement of the Suspension Period that is scheduled to settle during the Suspension Period will be rejected by, and will not be settled within, DTC.
Further, DTC is hereby instructed to write-down all participants’ positions held in the Notes on DTC’s records as of [the Write-Down and Cancellation Date/the date (and time, if practicably possible) of the occurrence of the Bankruptcy Event].
The Company hereby instructs the Paying Agent and Registrar to cancel the Notes and to make appropriate notations in the Register in accordance with the provisions of the Indenture as of [the Write-Down and Cancellation Date / the date (and time, if practicably possible) of the occurrence of the Bankruptcy Event]. The Company requests that the Paying Agent and Registrar certifies that the Notes have been so cancelled and disposed of.
[Upon cancellation of the Notes / Immediately upon the occurrence of the Bankruptcy Event], the Notes [shall become / became] null and void.
The Company further requests DTC to post this notice on its Reorganization Inquiry for Participants System (or such other system as DTC uses for providing notices to Holders of the Notes) and to transmit this notice to the participants of DTC holding positions in the Notes pursuant to DTC’s rules and procedures.
Should DTC, the Trustee or any Holders or beneficial owners of the Notes have any inquiries, please contact:
[Company Contact Person]
[Telephone]
[Fax]
[Email]
C-2
* The CUSIP number and ISIN appearing in this notice have been assigned to the Notes by organizations not affiliated with the Company and are included solely for the convenience of the Holders of the Notes. The Company will not be responsible for the selection or use of this CUSIP number or ISIN, nor is any representation made as to the correctness or accuracy of the same on the Notes or as indicated in this notice. The Write-Down and Cancellation of the Notes will not be affected by any defect in or omission of such numbers.
Dated:
| By: | ||
| Name: | ||
| Title: | ||
C-3
FORM OF GOING CONCERN WRITE-DOWN NOTICE
PURSUANT TO SECTION 14.06
NOTICE TO DTC, TRUSTEE AND AGENTS AND FOR PUBLICATION
AS A NOTICE TO HOLDERS AND BENEFICIAL OWNERS OF THE NOTES
[Company Letterhead]
To: The Depository Trust Company
55 Water Street, 25th Floor
New York, NY 10041-0099
Attn: Mandatory Reorganization Department
Fax: +1-212-855-5488
Email: mandatoryreorgannouncements@dtcc.com [* In the case of certificated securities, this notice shall be sent directly to Holders and references to DTC herein shall be amended accordingly.]
Citibank, N.A.
(as Trustee)
388 Greenwich Street
New York, NY 10013
United States of America
Citibank, N.A., London Branch, Corporate Trust Department
(as Paying Agent, Transfer Agent, Registrar and Authenticating Agent)
Citigroup Centre
Canada Square, Canary Wharf
London E14 5LB
United Kingdom
Re: Nomura Holdings, Inc.’s [U.S.$ /another currency][·]3 [·]% [Fixed Rate Resetting] [Perpetual Subordinated Notes] (CUSIP: [·]; ISIN: [·]) – Notice to DTC, the Trustee, the Agents and Holders and Beneficial Owners of the Notes of the Occurrence of a Capital Ratio Event and Going Concern Write-Down of the Notes
This notice is in relation to Nomura Holdings, Inc.’s [U.S.$/another currency][·] [[·]%] [fixed rate resetting] [perpetual subordinated notes] (CUSIP: [·]; ISIN: [·]) issued on [·], 20[·] (the “Notes”) pursuant to the perpetual subordinated indenture, dated [ ] (the “Indenture”) between Nomura Holdings, Inc. (the “Company”) and Citibank, N.A., as trustee (the “Trustee”), and offered and sold pursuant to the prospectus supplement dated [·], 20[·] and the accompanying prospectus dated [·], 20[·]. Capitalized terms used herein and not defined herein shall have the respective meanings ascribed to such terms in the Indenture.
The Company hereby notifies The Depository Trust Company (“DTC”), the Trustee, the Agents and the Holders and beneficial owners of the Notes that (i) [a Capital Ratio Event has occurred with respect to the Notes and a Going Concern Write-Down will therefore take place on the Going Concern Write-Down Date, which has been determined to be [insert the Going Concern Write-Down Date] / a Capital Ratio Event has occurred with respect to the Notes and the Going Concern Write-Down has therefore taken place on [insert date (and time, if practicably possible) of Capital Ratio Event], and (ii) the aggregate Going Concern Write-Down Amount, and the aggregate Current Principal Amount of the Notes on the Going Concern Write-Down Date after giving effect to such Going Concern Write-Down, each in respect of the Notes, have been determined to be $[describe the
| 3 Note: | Insert the aggregate principal amount of the Notes outstanding at the time of write-up (reflecting any repurchase or write-down/write-up prior thereto). |
D-1
aggregate Going Concern Write-Down Amount in respect of the Notes] and $[describe the aggregate Current Principal Amount of the Notes on the Going Concern Write-Down Date after giving effect to such Going Concern Write-Down], respectively.
[in the case of a full write-down after this Going Concern Write-Down:]
On [insert Going Concern Write-Down Date] (the “Going Concern Write-Down Date”), (i) the Current Principal Amount of the Notes per $1,000 in Original Principal Amount, except for principal that has become due and payable prior to the occurrence of the Capital Ratio Event and remains unpaid, [will be / was] written down to one cent per $1,000 in Original Principal Amount, and interest shall cease to accrue on the Notes, the Company [shall be / was] discharged and released from any and all of its obligations to pay the Current Principal Amount of the Notes in an amount so written down and interest on the Notes (including Additional Amounts with respect thereto, if any), (ii) the Company’s obligations shall remain with respect to (A) any accrued and unpaid interest on or the Current Principal Amount of the Notes and (B) any Additional Amounts, in the case of each of subclauses (A) and (B) of this paragraph (ii), if and only to the extent that such interest or Additional Amounts or the Current Principal Amount, as applicable, is not written down, discharged or released pursuant to paragraph (i) above, or became due and payable to the holders of the Notes prior to the Capital Ratio Event, and (iii) the Holders and beneficial owners of the Notes [will be / were] deemed to have irrevocably waived their right to claim or receive, and no longer have any rights against the Company with respect to, and be unable to instruct the Trustee to enforce, repayment of the Current Principal Amount of the Notes or interest on the Notes (including Additional Amounts with respect thereto, if any) written down, discharged or released pursuant to paragraph (i) above, and except as described in paragraph (ii) above, all rights of any Holder or beneficial owner for payment of any amounts under or in respect of the Notes [will become / became] null and void, and any Holder or beneficial owner who has received such payment [shall be / became] obliged to return the amount so received immediately to the Company.
DTC is hereby instructed to (i) write down all participants’ positions held in the Notes on DTC’s records to one cent per $1,000 in Original Principal Amount as of the Going Concern Write-Down Date and (ii) commence the Suspension Period by implementing a “chill” on the clearance and settlement of the Notes within DTC. The Suspension Period shall commence on the New York Banking Day immediately following the date on which this notice is received by DTC, or, if DTC so determines in its discretion in accordance with its rules and procedures, on the second (2nd) New York Banking Day immediately following the date on which this notice is received by DTC, and end in accordance with any further instruction given by the Company relating to any subsequent interest period during which a Write-Up Event occurs. The Holders and beneficial owners of the Notes will not be able to settle the transfer of any Notes through DTC upon commencement of the Suspension Period, and any sale or other transfer of the Notes that a Holder or beneficial owner of the Notes may have initiated prior to the commencement of the Suspension Period that is scheduled to settle during the Suspension Period will be rejected by, and will not be settled within, DTC.
The Company hereby instructs the Paying Agent and Registrar to make appropriate notations in the Register in accordance with the provisions of the Indenture as of the Going Concern Write-Down Date.
Further, the Company hereby instructs DTC, the Trustee and the Paying Agent to take any and all necessary action, if required, to implement an interest payment cancellation of the Notes in accordance with the provisions of the Indenture and DTC’s rules and procedures.
[in the case of a partial write-down after this Going Concern Write-Down:]
On [insert Going Concern Write-Down Date] (the “Going Concern Write-Down Date”), (i) the Current Principal Amount of the Notes per $1,000 in Original Principal Amount, except for principal that has become due and payable prior to the occurrence of the Capital Ratio Event and remain unpaid, [will be / was] written down
D-2
by $[·] per $[·]4 (the “Going Concern Write-Down Amount”), which is the Current Principal Amount per $1,000 in Original Principal Amount, and the Company [shall be / was] discharged and released from any and all of its obligations to pay the Current Principal Amount of the Notes in an amount equal to the Going Concern Write-Down Amount and the interest on the Notes (including Additional Amounts with respect thereto, if any) in an amount equal to the interest on the Going Concern Write-Down Amount (including Additional Amounts with respect thereto, if any), (ii) the Company’s obligations shall remain with respect to (A) any accrued and unpaid interest on or the Current Principal Amount of Notes and (B) any Additional Amounts, in the case of each of subclauses (A) and (B) of this paragraph (ii), if and only to the extent that such interest or Additional Amounts or the Current Principal Amount, as applicable, is not written down, discharged or released pursuant to paragraph (i) above, or became due and payable to the holders of the Notes prior to the Capital Ratio Event, and (iii) the Holders and beneficial owners of the Notes [will be / were] deemed to have irrevocably waived their right to claim or receive, and no longer have any rights against the Company with respect to, and be unable to instruct the Trustee to enforce, repayment of the Current Principal Amount of the Notes or interest on the Notes (including Additional Amounts with respect thereto, if any) written down, discharged or released pursuant to paragraph (i) above, and except as described in paragraph (ii) above, all rights of any Holder or beneficial owner for payment of any amounts under or in respect of the Notes [will become / became] null and void, and any Holder or beneficial owner who has received such payment [shall be / became] obliged to return the amount so received immediately to the Company.
DTC is hereby instructed to write down all participants’ positions held in the Notes on DTC’s records by an amount equal to the Going Concern Write-Down Amount (as described above) as of the Going Concern Write-Down Date.
The Company hereby instructs the Paying Agent and Registrar to make appropriate notations in the Register in accordance with the provisions of the Indenture as of the Going Concern Write-Down Date.
Further, the Company hereby instructs DTC, the Trustee and the Paying Agent to take any and all necessary action, if required, to implement interest payments based on the Current Principal Amount of the Notes in accordance with the provisions of the Indenture and DTC’s rules and procedures.
Interest on the Notes payable on or after the occurrence of the Capital Ratio Event shall be paid pursuant to [Section 3.12] and other provisions of the Indenture.
[in either case:]
The Company further requests DTC to post this notice on its Reorganization Inquiry for Participants System (or such other system as DTC uses for providing notices to Holders of the Notes) and to transmit this notice to the participants of DTC holding positions in the Notes pursuant to DTC’s rules and procedures.
Should DTC, the Trustee or any Holders or beneficial owners of the Notes have any inquiries, please contact:
[Company Contact Person]
[Telephone]
[Fax]
[Email]
| 4 Note: | Describe the Going Concern Write-Down Amount, and insert the Current Principal Amount per $1,000 in Original Principal Amount of the Notes. |
D-3
* The CUSIP number and ISIN appearing in this notice have been assigned to the Notes by organizations not affiliated with the Company and are included solely for the convenience of the Holders of the Notes. The Company will not be responsible for the selection or use of this CUSIP number or ISIN, nor is any representation made as to the correctness or accuracy of the same on the Notes or as indicated in this notice. The Going Concern Write-Down of the Notes will not be affected by any defect in or omission of such numbers.
Dated:
| By: | ||
| Name: | ||
| Title: | ||
D-4
FORM OF WRITE-UP NOTICE
PURSUANT TO SECTION 14.08
NOTICE TO DTC, TRUSTEE AND AGENTS AND FOR PUBLICATION
AS A NOTICE TO HOLDERS AND BENEFICIAL OWNERS OF THE NOTES
[Company Letterhead]
To: The Depository Trust Company
55 Water Street, 25th Floor
New York, NY 10041-0099
Attn: Mandatory Reorganization Department
Fax: +1-212-855-5488
Email: mandatoryreorgannouncements@dtcc.com [* In the case of certificated securities, this notice shall be sent directly to Holders and references to DTC herein shall be amended accordingly.]
Citibank, N.A.
(as Trustee)
388 Greenwich Street
New York, NY 10013
United States of America
Citibank, N.A., London Branch, Corporate Trust Department
(as Paying Agent, Transfer Agent, Registrar and Authenticating Agent)
Citigroup Centre
Canada Square, Canary Wharf
London E14 5LB
United Kingdom
Re: Nomura Holdings, Inc.’s [U.S.$/another currency] [·]5 [·]% [Fixed Rate Resetting] [Perpetual Subordinated Notes] (CUSIP: [·]; ISIN: [·]) – Notice to DTC, the Trustee, the Agents and Holders and Beneficial Owners of the Notes of the Occurrence of a Write-Up Event and Write-Up of the Notes
This notice is in relation to Nomura Holdings, Inc.’s [U.S.$]/another currency] [·] [·]% [fixed rate resetting] [perpetual subordinated notes] (CUSIP: [·]; ISIN: [·]) issued on [·], 20[·] (the “Notes”) pursuant to the perpetual subordinated indenture, dated [ ] (the “Indenture”) between Nomura Holdings, Inc. (the “Company”) and Citibank, N.A., as trustee (the “Trustee”), and offered and sold pursuant to the prospectus supplement dated [·], 20[·] and the accompanying prospectus dated [·], 20[·]. Capitalized terms used herein and not defined herein shall have the respective meanings ascribed to such terms in the Indenture.
The Company hereby notifies The Depository Trust Company (“DTC”), the Trustee, the Agents and the Holders and beneficial owners of the Notes that (i) a Write-Up Event has occurred with respect to the Notes and a Write-Up will therefore take place on the Write-Up Date, which has been determined to be [insert the Write-Up Date], and (ii) the aggregate Write-Up Amount, and the aggregate Current Principal Amount of the Notes on the Write-Up Date after giving effect to the Write-Up, each in respect of the Notes, have been determined to be $[describe the aggregate Write-Up Amount in respect of the Notes] and $[describe the aggregate Current Principal Amount of the Notes on the Write-Up Date after giving effect to such Write-Up], respectively.
| 5 Note: | Insert the aggregate principal amount of the Notes outstanding at the time of write-up (reflecting any repurchase or write-down/write-up prior thereto). |
E-1
On [insert the Write-Up Date] (the “Write-Up Date”), the Current Principal Amount of the outstanding Notes per $1,000 in Original Principal Amount that have been subject to one or more Going Concern Write-Downs will be increased by $[·] per $[·]6 (the “Write-Up Amount”), which is the Current Principal Amount per $1,000 in Original Principal Amount.
DTC is hereby instructed to write up all participants’ positions held in the Notes on DTC’s records by an amount equal to the relevant Write-Up Amount as of the Write-Up Date. As set forth in the Indenture and the Notes, on the Write-Up Date, claims of Holders of the Notes with respect to payments of principal of the Notes that were previously waived upon the occurrence of one or more Going Concern Write-Downs, and the Company’s obligations to pay the principal of the Notes that were previously discharged and released upon the occurrence of one or more Going Concern Write-Downs, shall be reinstated, and such waiver, discharge and release previously given or granted shall be of no further effect, without any retroactive effect, in each case, only to the extent of the Write-Up Amount.
The Company hereby instructs the Paying Agent and Registrar to make appropriate notations in the Register in accordance with the provisions of the Indenture as of the Write-Up Date.
The Company hereby instructs DTC, the Trustee and the Paying Agent to take any and all necessary action, if required, to implement interest payments based on the Current Principal Amount of the Notes in accordance with the provisions of the Indenture and DTC’s rules and procedures.
Interest on the Notes payable on or after the occurrence of the Write-Up Event shall be paid pursuant to [Section 3.12] and other provisions of the Indenture.
The Company further requests DTC to post this notice on its Reorganization Inquiry for Participants System (or such other system as DTC uses for providing notices to Holders of Notes) and to transmit this notice to the participants of DTC holding positions in the Notes pursuant to DTC’s rules and procedures.
Should DTC, the Trustee or any Holders or beneficial owners of the Notes have any inquiries, please contact:
[Company Contact Person]
[Telephone]
[Fax]
[Email]
* The CUSIP number and ISIN appearing in this notice have been assigned to the Notes by organizations not affiliated with the Company and are included solely for the convenience of the Holders of the Notes. The Company will not be responsible for the selection or use of this CUSIP number or ISIN, nor is any representation made as to the correctness or accuracy of the same on the Notes or as indicated in this notice. The Write-Up of the Notes will not be affected by any defect in or omission of such numbers.
Dated:
| By: | ||
| Name: | ||
| Title: | ||
| 6 Note: | Describe the Going Concern Write-Down Amount, and insert the Current Principal Amount per $1,000 in Original Principal Amount of the Notes. |
E-2
Exhibit 5.1
December 19, 2024
Nomura Holdings, Inc.,
13-1, Nihonbashi 1-chome,
Chuo-ku, Tokyo 103-8645,
Japan.
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933 (the “Act”) of an unspecified principal amount of senior debt securities (the “Senior Debt Securities”) and an unspecified principal amount of perpetual subordinated debt securities (the “Perpetual Subordinated Debt Securities,” and together with the Senior Debt Securities, the “Securities”) of Nomura Holdings, Inc., a Japanese corporation (the “Company”), we, as your United States counsel, have examined such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion.
Upon the basis of such examination, it is our opinion that, (i) when the registration statement on Form F-3 (the “Registration Statement”) has become effective under the Act, (ii) in the case of the Senior Debt Securities, when the terms of the Senior Debt Securities and of their issuance and sale have been duly established in conformity with the senior debt indenture entered into between the Company and Citibank, N.A., dated as of January 16, 2020 (the “Senior Debt Securities Indenture”), or, in the case of the Perpetual Subordinated Debt Securities, when the perpetual subordinated indenture to be entered into between the Company and Citibank, N.A. (the “Perpetual Subordinated Debt Securities Indenture”) has been duly executed and delivered, and the terms of the Perpetual Subordinated Debt Securities and of their issuance and sale have been duly established in conformity with such Perpetual Subordinated Debt Securities Indenture, in each such case, so as not to violate any applicable law or result in a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the Company, and (iii) when the Senior Debt Securities or the Perpetual Subordinated Debt Securities, as applicable, have been duly executed and authenticated in accordance with the Senior Debt Securities Indenture or the Perpetual Subordinated Debt Securities Indenture, respectively, and issued and sold as contemplated in the Registration Statement, and assuming that such Securities will constitute valid and legally binding obligations of the Company under the laws of Japan, such Securities will constitute valid and legally binding obligations of the Company, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.
In rendering the foregoing opinion, we are not passing upon, and assume no responsibility for, any disclosure in any registration statement or any related prospectus or other offering material relating to the offer and sale of the Securities.
We note that, as of the date of this opinion, a judgment for money in an action based on a Security denominated in a foreign currency or currency unit in a Federal or state court in the United States ordinarily would be enforced in the United States only in United States dollars. The date used to determine the rate of conversion of the foreign currency or currency unit in which a particular Security is denominated into United States dollars will depend upon various factors, including which court renders the judgment. Under Section 27 of the New York Judiciary Law, a state court in the State of New York rendering a judgment on a Security would be required to render such judgment in the foreign currency or currency unit in which the Security is denominated, and such judgment would be converted into United States dollars at the exchange rate prevailing on the date of entry of the judgment.
The foregoing opinion is limited to the Federal laws of the United States and the laws of the State of New York, and we are expressing no opinion as to the effect of the laws of any other jurisdiction. With respect to all matters of Japanese law, we note that you have received an opinion, dated December 19, 2024, of Anderson Mori & Tomotsune.
| Nomura Holdings, Inc. |
- 2 - |
We have relied as to certain factual matters on information obtained from public officials, officers of the Company and other sources believed by us to be responsible, and we have assumed that the Senior Debt Securities Indenture has been duly authorized, executed and delivered by the Trustee thereunder, an assumption which we have not independently verified.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the heading “Legal Matters” in the prospectus included in the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act.
| Very truly yours, |
| /s/ SULLIVAN & CROMWELL LLP |
Exhibit 5.2
December 19, 2024
Nomura Holdings, Inc.
13-1, Nihonbashi 1-chome
Chuo-ku, Tokyo 103-8645
Japan
NOMURA HOLDINGS, INC.
Registration Statement on Form F-3
Ladies and Gentlemen:
We have acted as Japanese counsel to Nomura Holdings, Inc. (the “Company”) in connection with its registration statement on Form F-3 (the “Registration Statement”), filed with the U.S. Securities and Exchange Commission on December 19, 2024 under the U.S. Securities Act of 1933, as amended (the “Securities Act”), relating to the registration of the senior debt securities and the perpetual subordinated debt securities (collectively, the “Securities”) of the Company.
For the purpose of this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments as we have deemed necessary, including the Articles of Incorporation of the Company, the Registration Statement and the prospectus dated December 19, 2024 (the “Base Prospectus”) included in the Registration Statement. In such examination, without independent investigation, we have assumed the genuineness of all signatures and seal impressions, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, photostatic, reproduced or conformed copies, the authenticity of the originals of such documents and that the statements regarding matters of fact in the certificates, records, agreements, instruments and documents that we have examined are accurate and complete.
Based upon the foregoing and subject to the qualifications and limitations stated herein, we are, as of the date hereof, of the opinion that:
(1) The Company is validly existing as a joint stock corporation incorporated with limited liability under the laws of Japan and has the corporate power and authority to own, lease and operate its properties and assets and conduct its business as described in the Base Prospectus; and
(2) The Securities, upon due authorization by all necessary corporate action of the Company, and when the entire amount of the purchase price for the Securities has been paid in full and the certificates for the Securities have been duly signed manually or in facsimile, authenticated and delivered, and other necessary procedures have been completed, each in accordance with and in the manner contemplated in the related agreements, Japanese law and the Articles of Incorporation of the Company, and assuming that the Securities will constitute legally valid and binding obligations of the Company under their governing law, will constitute legally valid and binding obligations of the Company in accordance with their terms, subject to bankruptcy, civil rehabilitation, reorganization, or other similar laws relating to or affecting creditors’ rights generally.
The foregoing opinion is limited to matters of the laws of Japan, and we express no opinion herein as to any matter of law other than the laws of Japan.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our name under the captions “Legal Matters” and “Enforcement of Civil Liabilities” in the Base Prospectus. In giving this consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act.
| Yours faithfully, |
| /s/ ANDERSON MORI & TOMOTSUNE |
| Anderson Mori & Tomotsune |
Exhibit 15.1
December 19, 2024
The Board of Directors
Nomura Holdings, Inc.
We are aware of the incorporation by reference in this Registration Statement (Form F-3) and related Prospectus of Nomura Holdings, Inc. for the registration of senior debt securities and perpetual subordinated debt securities of our report dated December 13, 2024 relating to the unaudited consolidated balance sheet of Nomura Holdings, Inc. as of September 30, 2024, and the related unaudited consolidated statements of income, comprehensive income, changes in equity and cash flows for the six-month periods ended September 30, 2024 and 2023 that is included in its Form 6-K dated December 13, 2024.
/s/ Ernst & Young ShinNihon LLC
Tokyo, Japan
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption “Experts” in this Registration Statement (Form F-3) and related Prospectus of Nomura Holdings, Inc. for the registration of senior debt securities and perpetual subordinated debt securities and to the incorporation by reference therein of our reports dated June 26, 2024, with respect to the consolidated financial statements of Nomura Holdings, Inc., and the effectiveness of internal control over financial reporting of Nomura Holdings, Inc., included in its Annual Report (Form 20-F) for the year ended March 31, 2024, filed with the Securities and Exchange Commission.
/s/ Ernst & Young ShinNihon LLC
Tokyo, Japan
December 19, 2024
Exhibit 25.1
Registration No.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
| ☐ | Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305 (b)(2) |
CITIBANK, N.A.
(Exact name of Trustee as specified in its charter)
| A National Banking Association | 13-5266470 | |
| (Jurisdiction of incorporation or organization if not a U.S. national bank) |
(I.R.S. Employer Identification No.) |
| 399 Park Avenue, | ||
| New York, New York | 10043 | |
| (Address of principal executive office) | (Zip Code) |
Citibank, N.A.
388 Greenwich Street, 14th floor
New York, N.Y. 10013
(212) 816-5805
(Name, address, and telephone number of agent for service)
NOMURA HOLDINGS, INC.
(Issuer with Respect to the Securities)
(Exact name of obligor as specified in its charter)
NOMURA HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
| Japan | None | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. employer identification no.) |
| 13-1, Nihonbashi 1-chome | ||
| Chuo-ku, Tokyo | ||
| Japan | 103-8645 | |
| (Address of principal executive offices) | (Zip Code) |
Senior Debt Securities
(Title of Indenture Securities)
| Item 1. | General Information. |
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it is subject.
| Name |
Address | |
| Comptroller of the Currency |
Washington, D.C. | |
| Federal Reserve Bank of New York |
New York, NY | |
| 33 Liberty Street |
||
| New York, NY |
||
| Federal Deposit Insurance Corporation |
Washington, D.C. | |
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
| Item 2. | Affiliations with Obligor. |
If the obligor is an affiliate of the trustee, describe each such affiliation.
None.
| Items 3 -15. | Not Applicable. |
| Item 16. | List of Exhibits. |
List below all exhibits filed as a part of this Statement of Eligibility.
Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as exhibits hereto.
| Exhibit 1 - |
Copy of Articles of Association of the Trustee, as now in effect. (Exhibit 1 to T-1 filed October 5, 2012 under File No. 333-183223). | |
| Exhibit 2 - |
Copy of certificate of authority of the Trustee to commence business. (Exhibit 2 to T-1 to Registration Statement No. 2-29577). | |
| Exhibit 3 - |
Copy of authorization of the Trustee to exercise corporate trust powers. (Exhibit 3 to T-1 to Registration Statement No. 2-55519) | |
| Exhibit 4 - |
Copy of existing By-Laws of the Trustee. (Exhibit 4 to T-1 filed October 5, 2012 under File No. 333-183223). | |
| Exhibit 5 - |
Not applicable. | |
| Exhibit 6 - |
The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939. (Exhibit 6 to T-1 to Registration Statement No. 33-19227.) | |
| Exhibit 7 - |
Copy of the latest Report of Condition of Citibank, N.A. (as of December 31, 2023—attached) | |
| Exhibit 8 - |
Not applicable. | |
| Exhibit 9 - |
Not applicable. | |
2
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, Citibank, N.A., a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York and State of New York, on the 19th day of December, 2024.
| CITIBANK, N.A. | ||
| By |
/s/ Keri-anne Marshall | |
| Keri-anne Marshall | ||
| Senior Trust Officer | ||
3
| CONSOLIDATED BALANCE SHEET | Citigroup Inc. and Subsidiaries | |||
| December 31, | ||||||||
| In millions of dollars | 2023 | 2022 | ||||||
| Assets |
||||||||
| Cash and due from banks (including segregated cash and other deposits) |
$ | 27,342 | $ | 30,577 | ||||
| Deposits with banks, net of allowance |
233,590 | 311,448 | ||||||
| Securities borrowed and purchased under agreements to resell (including $206,059 and $239,527 as of December 31, 2023 and 2022, respectively, at fair value), net of allowance |
345,700 | 365,401 | ||||||
| Brokerage receivables, net of allowance |
53,915 | 54,192 | ||||||
| Trading account assets (including $197,156 and $133,535 pledged to creditors at December 31, 2023 and 2022, respectively) |
411,756 | 334,114 | ||||||
| Investments: |
||||||||
| Available-for-sale debt securities (including $11,868 and $10,933 pledged to creditors as of December 31, 2023 and 2022, respectively) |
256,936 | 249,679 | ||||||
| Held-to-maturity debt securities, net of allowance (fair value of which is $235,001 and $243,648 as of December 31, 2023 and 2022, respectively) (includes $71 and $0 pledged to creditors as of December 31, 2023 and 2022, respectively) |
254,247 | 268,863 | ||||||
| Equity securities (including $766 and $895 as of December 31, 2023 and 2022, respectively, at fair value) |
7,902 | 8,040 | ||||||
| Total investments |
$ | 519,085 | $ | 526,582 | ||||
| Loans: |
||||||||
| Consumer (including $313 and $237 as of December 31, 2023 and 2022, respectively, at fair value) |
389,197 | 368,067 | ||||||
| Corporate (including $7,281 and $5,123 as of December 31, 2023 and 2022, respectively, at fair value) |
300,165 | 289,154 | ||||||
| Loans, net of unearned income |
$ | 689,362 | $ | 657,221 | ||||
| Allowance for credit losses on loans (ACLL) |
(18,145 | ) | (16,974 | ) | ||||
| Total loans, net |
$ | 671,217 | $ | 640,247 | ||||
| Goodwill |
20,098 | 19,691 | ||||||
| Intangible assets (including MSRs of $691 and $665 as of December 31, 2023 and 2022, respectively) |
4,421 | 4,428 | ||||||
| Premises and equipment, net of depreciation and amortization |
28,747 | 26,253 | ||||||
| Other assets (including $12,290 and $10,658 as of December 31, 2023 and 2022, respectively, at fair value), net of allowance |
95,963 | 103,743 | ||||||
| Total assets |
$ | 2,411,834 | $ | 2,416,676 | ||||
Statement continues on the next page.
4
| CONSOLIDATED BALANCE SHEET (Continued) |
Citigroup Inc. and Subsidiaries |
| December 31, | ||||||||
| In millions of dollars, except shares and per share amounts | 2023 | 2022 | ||||||
| Liabilities |
||||||||
| Deposits (including $2,440 and $1,875 as of December 31, 2023 and 2022, respectively, at fair value) |
$ | 1,308,681 | $ | 1,365,954 | ||||
| Securities loaned and sold under agreements to repurchase (including $62,485 and $70,886 as of December 31, 2023 and 2022, respectively, at fair value) |
278,107 | 202,444 | ||||||
| Brokerage payables (including $4,321 and $4,439 as of December 31, 2023 and 2022, respectively, at fair value) |
63,539 | 69,218 | ||||||
| Trading account liabilities |
155,345 | 170,647 | ||||||
| Short-term borrowings (including $6,545 and $6,222 as of December 31, 2023 and 2022, respectively, at fair value) |
37,457 | 47,096 | ||||||
| Long-term debt (including $116,338 and $105,995 as of December 31, 2023 and 2022, respectively, at fair value) |
286,619 | 271,606 | ||||||
| Other liabilities, plus allowances |
75,835 | 87,873 | ||||||
| Total liabilities |
$ | 2,205,583 | $ | 2,214,838 | ||||
| Stockholders’ equity |
||||||||
| Preferred stock ($1.00 par value; authorized shares: 30 million), issued shares: as of December 31, 2023 —704,000 and as of December 31, 2022—759,800, at aggregate liquidation value |
$ | 17,600 | $ | 18,995 | ||||
| Common stock ($0.01 par value; authorized shares: 6 billion), issued shares: as of December 31, 2023—3,099,691,704 and as of December 31, 2022—3,099,669,424 |
31 | 31 | ||||||
| Additional paid-in capital |
108,955 | 108,458 | ||||||
| Retained earnings |
198,905 | 194,734 | ||||||
| Treasury stock, at cost: December 31, 2023—1,196,577,865 shares and December 31, 2022—1,162,682,999 shares |
(75,238 | ) | (73,967 | ) | ||||
| Accumulated other comprehensive income (loss) (AOCI) |
(44,800 | ) | (47,062 | ) | ||||
| Total Citigroup stockholders’ equity |
$ | 205,453 | $ | 201,189 | ||||
| Noncontrolling interests |
798 | 649 | ||||||
| Total equity |
$ | 206,251 | $ | 201,838 | ||||
| Total liabilities and equity |
$ | 2,411,834 | $ | 2,416,676 | ||||
The Notes to the Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.
5
Exhibit 25.2
Registration No.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
| ☐ | Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305 (b)(2) |
CITIBANK, N.A.
(Exact name of Trustee as specified in its charter)
| A National Banking Association | 13-5266470 | |
| (Jurisdiction of incorporation or organization if not a U.S. national bank) |
(I.R.S. Employer Identification No. ) |
| 399 Park Avenue, | ||
| New York, New York | 10043 | |
| (Address of principal executive office) | (Zip Code) |
Citibank, N.A.
388 Greenwich Street, 14th floor
New York, N.Y. 10013
(212) 816-5805
(Name, address, and telephone number of agent for service)
NOMURA HOLDINGS, INC.
(Issuer with Respect to the Securities)
(Exact name of obligor as specified in its charter)
NOMURA HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
| Japan | None | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. employer identification no.) |
| 13-1, Nihonbashi 1-chome | ||
| Chuo-ku, Tokyo | ||
| Japan | 103-8645 | |
| (Address of principal executive offices) | (Zip Code) |
Perpetual Subordinated Debt Securities
(Title of Indenture Securities)
| Item 1. | General Information. |
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it is subject.
| Name |
Address | |
| Comptroller of the Currency |
Washington, D.C. | |
| Federal Reserve Bank of New York |
New York, NY | |
| 33 Liberty Street |
||
| New York, NY |
||
| Federal Deposit Insurance Corporation |
Washington, D.C. | |
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
| Item 2. | Affiliations with Obligor. |
If the obligor is an affiliate of the trustee, describe each such affiliation.
None.
| Items 3 -15. | Not Applicable. |
| Item 16. | List of Exhibits. |
List below all exhibits filed as a part of this Statement of Eligibility.
Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as exhibits hereto.
| Exhibit 1 - |
Copy of Articles of Association of the Trustee, as now in effect. (Exhibit 1 to T-1 filed October 5, 2012 under File No. 333-183223). | |
| Exhibit 2 - |
Copy of certificate of authority of the Trustee to commence business. (Exhibit 2 to T-1 to Registration Statement No. 2-29577). | |
| Exhibit 3 - |
Copy of authorization of the Trustee to exercise corporate trust powers. (Exhibit 3 to T-1 to Registration Statement No. 2-55519) | |
| Exhibit 4 - |
Copy of existing By-Laws of the Trustee. (Exhibit 4 to T-1 filed October 5, 2012 under File No. 333-183223). | |
| Exhibit 5 - |
Not applicable. | |
| Exhibit 6 - |
The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939. (Exhibit 6 to T-1 to Registration Statement No. 33-19227.) | |
| Exhibit 7 - |
Copy of the latest Report of Condition of Citibank, N.A. (as of December 31, 2023 – attached) | |
| Exhibit 8 - |
Not applicable. | |
| Exhibit 9 - |
Not applicable. | |
2
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, Citibank, N.A., a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York and State of New York, on the 19th day of December, 2024.
| CITIBANK, N.A. | ||
| By |
/s/ Keri-anne Marshall | |
| Keri-anne Marshall | ||
| Senior Trust Officer | ||
3
| CONSOLIDATED BALANCE SHEET | Citigroup Inc. and Subsidiaries | |||
| December 31, | ||||||||
| In millions of dollars | 2023 | 2022 | ||||||
| Assets |
||||||||
| Cash and due from banks (including segregated cash and other deposits) |
$ | 27,342 | $ | 30,577 | ||||
| Deposits with banks, net of allowance |
233,590 | 311,448 | ||||||
| Securities borrowed and purchased under agreements to resell (including $206,059 and $239,527 as of December 31, 2023 and 2022, respectively, at fair value), net of allowance |
345,700 | 365,401 | ||||||
| Brokerage receivables, net of allowance |
53,915 | 54,192 | ||||||
| Trading account assets (including $197,156 and $133,535 pledged to creditors at December 31, 2023 and 2022, respectively) |
411,756 | 334,114 | ||||||
| Investments: |
||||||||
| Available-for-sale debt securities (including $11,868 and $10,933 pledged to creditors as of December 31, 2023 and 2022, respectively) |
256,936 | 249,679 | ||||||
| Held-to-maturity debt securities, net of allowance (fair value of which is $235,001 and $243,648 as of December 31, 2023 and 2022, respectively) (includes $71 and $0 pledged to creditors as of December 31, 2023 and 2022, respectively) |
254,247 | 268,863 | ||||||
| Equity securities (including $766 and $895 as of December 31, 2023 and 2022, respectively, at fair value) |
7,902 | 8,040 | ||||||
| Total investments |
$ | 519,085 | $ | 526,582 | ||||
| Loans: |
||||||||
| Consumer (including $313 and $237 as of December 31, 2023 and 2022, respectively, at fair value) |
389,197 | 368,067 | ||||||
| Corporate (including $7,281 and $5,123 as of December 31, 2023 and 2022, respectively, at fair value) |
300,165 | 289,154 | ||||||
| Loans, net of unearned income |
$ | 689,362 | $ | 657,221 | ||||
| Allowance for credit losses on loans (ACLL) |
(18,145 | ) | (16,974 | ) | ||||
| Total loans, net |
$ | 671,217 | $ | 640,247 | ||||
| Goodwill |
20,098 | 19,691 | ||||||
| Intangible assets (including MSRs of $691 and $665 as of December 31, 2023 and 2022, respectively) |
4,421 | 4,428 | ||||||
| Premises and equipment, net of depreciation and amortization |
28,747 | 26,253 | ||||||
| Other assets (including $12,290 and $10,658 as of December 31, 2023 and 2022, respectively, at fair value), net of allowance |
95,963 | 103,743 | ||||||
| Total assets |
$ | 2,411,834 | $ | 2,416,676 | ||||
Statement continues on the next page.
4
| CONSOLIDATED BALANCE SHEET (Continued) |
Citigroup Inc. and Subsidiaries |
| December 31, | ||||||||
| In millions of dollars, except shares and per share amounts | 2023 | 2022 | ||||||
| Liabilities |
||||||||
| Deposits (including $2,440 and $1,875 as of December 31, 2023 and 2022, respectively, at fair value) |
$ | 1,308,681 | $ | 1,365,954 | ||||
| Securities loaned and sold under agreements to repurchase (including $62,485 and $70,886 as of December 31, 2023 and 2022, respectively, at fair value) |
278,107 | 202,444 | ||||||
| Brokerage payables (including $4,321 and $4,439 as of December 31, 2023 and 2022, respectively, at fair value) |
63,539 | 69,218 | ||||||
| Trading account liabilities |
155,345 | 170,647 | ||||||
| Short-term borrowings (including $6,545 and $6,222 as of December 31, 2023 and 2022, respectively, at fair value) |
37,457 | 47,096 | ||||||
| Long-term debt (including $116,338 and $105,995 as of December 31, 2023 and 2022, respectively, at fair value) |
286,619 | 271,606 | ||||||
| Other liabilities, plus allowances |
75,835 | 87,873 | ||||||
| Total liabilities |
$ | 2,205,583 | $ | 2,214,838 | ||||
| Stockholders’ equity |
||||||||
| Preferred stock ($1.00 par value; authorized shares: 30 million), issued shares: as of December 31, 2023—704,000 and as of December 31, 2022—759,800, at aggregate liquidation value |
$ | 17,600 | $ | 18,995 | ||||
| Common stock ($0.01 par value; authorized shares: 6 billion), issued shares: as of December 31, 2023—3,099,691,704 and as of December 31, 2022—3,099,669,424 |
31 | 31 | ||||||
| Additional paid-in capital |
108,955 | 108,458 | ||||||
| Retained earnings |
198,905 | 194,734 | ||||||
| Treasury stock, at cost: December 31, 2023—1,196,577,865 shares and December 31, 2022—1,162,682,999 shares |
(75,238 | ) | (73,967 | ) | ||||
| Accumulated other comprehensive income (loss) (AOCI) |
(44,800 | ) | (47,062 | ) | ||||
| Total Citigroup stockholders’ equity |
$ | 205,453 | $ | 201,189 | ||||
| Noncontrolling interests |
798 | 649 | ||||||
| Total equity |
$ | 206,251 | $ | 201,838 | ||||
| Total liabilities and equity |
$ | 2,411,834 | $ | 2,416,676 | ||||
The Notes to the Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.
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